Technology Spillovers through Foreign Direct Investment

Yuko Kinoshita

No 221, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: I study the effects of technology spillovers ("catch-up") and a firm's investment in skills (training) on the firm's productivity when FDI (foreign direct investment) is a carrier of new technology. Using a 1992 firm-level survey data in China, I test the investment equation proposed by Parente and Prescott (JPE, April 1994). I find: (1) The catch-up effect and a firm's training both significantly raise a firm's TFP (total factor productivity) growth, just as Parente and Prescott hypothesized, (2) Chinese local firms are more likely to train skilled workers than foreign firms, which accelerated technology spillovers they received from foreign firms, (3) Foreign joint ventures did not significantly raise local firms' TFP growth, (4) Foreign-owned firms in China are unlikely to train local workers. Instead, they import intermediate inputs from their home countries.

Pages: pages
Date: 1999-01-01
New Economics Papers: this item is included in nep-cwa, nep-ifn, nep-sea and nep-tid
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