Does Foreign Direct Investment Transfer Technology Across Borders?

Bruno Van Pottelsberghe De La Potterie and Frank Lichtenberg
Authors registered in the RePEc Author Service: Bruno van Pottelsberghe de la Potterie (bruno.vanpottelsberghe@uni-corvinus.hu)

The Review of Economics and Statistics, 2001, vol. 83, issue 3, 490-497

Abstract: Previous studies have found that importing goods from R&D-intensive countries raises a country's productivity. In this paper, we investigate econometrically whether foreign direct investment (FDI) also transfers technology across borders. The data indicates that FDI transfers technology, but only in one direction: a country's productivity is increased if it invests in R&D-intensive foreign countries-particularly in recent years-but not if foreign R&D-intensive countries invest in it. Other findings of the paper are that the ratio of foreign-R&D benefits conveyed by outward FDI to foreign R&D benefits conveyed by imports is higher for large countries than it is for small ones, that failure to account for international R&D spillovers leads to upwardly biased estimates of the output elasticity of the domestic R&D capital stock, and that there are much larger transfers of technology from the United States to Japan than there are from Japan to the United States. © 2001 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

Date: 2001
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