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Technology Spillover and Absorptive Capacity of Firms and Countries

Shujiro Urata and Youngmin Baek

No 1323, ADBI Working Papers from Asian Development Bank Institute

Abstract: We examine the foreign direct investment (FDI) spillover effects in developing countries and investigate the importance of the absorptive capacity of a firm and a country in realizing and facilitating FDI spillover. We use data obtained from the World Bank’s Enterprise Surveys for 107 countries from 2007 to 2020. We find that firms in developing countries do not benefit from horizontal FDI but benefit from forward and backward vertical FDI. We also find that firms can benefit from horizontal, forward, and backward FDI by improving the absorptive capacity of firms and host countries. Based on these findings, we present several recommendations to help firms benefit from FDI spillover.

Keywords: foreign direct investment; technology transfer; absorptive capacity (search for similar items in EconPapers)
JEL-codes: D22 F21 O30 R10 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2022-06
New Economics Papers: this item is included in nep-bec, nep-cse, nep-int, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbiwp:1323

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