Foreign Direct Investment and Productivity Growth: The Canadian Host-Country Experience

G. Surendra, Wulong Gu and Frank Lee

Gouvernement du Canada - Industrial Organization from Gouvernement du Canada - Industry Canada

Abstract: In this paper, we analyze the impact of technology transfers and spillovers from inward foreign direct investment (FDI) on the production cost and structure of Canadian industries. Specifically, we: (1) estimate the effects of inward FDI on the cost of production; and (2) examine the impact of FDI on the structure of production, i.e., the effects on demand for factors such as capital, labour, intermediate goods and R&D capital. In doing so, we control for domestic and international R&D spillovers. We find that inward FDI lowers production cost and increases productivity in most Canadian industries, and that it alters the structure of production as industries adjust their demand for factor inputs. Our estimates show that inward FDI is biased against the use of capital, labour and intermediate goods and somewhat biased toward the use of domestic R&D. We also find evidence of significant positive international R&D spillovers through trade flows. The results indicate that international R&D spillovers are biased against the use of physical capital, labour and intermediate goods, and biased toward the use of domestic R&D capital. The relationship between domestic R&D and international R&D spillovers suggests that domestic firms must invest in R&D to capture the benefits of R&D spillovers from abroad

Keywords: PRODUCTIVITY; INNOVATIONS; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: L20 L23 O32 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (8)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:cagoio:30

Access Statistics for this paper

More papers in Gouvernement du Canada - Industrial Organization from Gouvernement du Canada - Industry Canada Canada; Industry Canada, Publications Officer, Micro-Economic Policy Analysis, Industry Canada 5th Floor, West Tower 235 Queen Street, Ottawa Ontario K1A 0H5. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().