Foreign Direct Investment and Spillovers through Workers' Mobility

Andrea Fosfuri, Massimo Motta () and Thomas Rønde

No 2194, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze a model where a multinational firm can use a superior technology in a foreign subsidiary only after training a local worker. Technological spillovers from foreign direct investment arise when this worker is later hired by a local firm. Pecuniary spillovers arise when the foreign affiliate pays the trained worker a higher wage to prevent her from moving to a local competitor. We study conditions under which these spillovers occur. We also show that the multinational firm might find it optimal to export instead of investing abroad to avoid dissipation of its intangible assets or the payment of a higher wage to the trained worker.

Keywords: Externalities; Labour Mobility; Multinational Corporations; Spillovers; Training (search for similar items in EconPapers)
JEL-codes: F23 J63 O12 (search for similar items in EconPapers)
Date: 1999-08
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Citations: View citations in EconPapers (30)

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Journal Article: Foreign direct investment and spillovers through workers' mobility (2001)
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