IVS Seminar 04.11.2005

James H Love, Aston Business School, UK "Linking FDI Motivation and Host Economy Productivity Effects: Conceptual and Empirical Analysis" (joint with Nigel Driffield)

Friday, November 4, 2005 - 14:00 to 15:15

Abstract

We develop a taxonomy which relates FDI motivation to its anticipated effects on host countries' domestic productivity. The taxonomy is based firmly in international business theory, and allows for both technology and cost-based motivations. We then empirically examine the effects of FDI into the United Kingdom on domestic productivity and find that different types of FDI have markedly different productivity spillover effects, which are consistent with the conceptual analysis. The UK gains substantially only from inward FDI motivated by a strong technology-based ownership advantage.  As theory predicts, inward FDI motivated by technology sourcing considerations leads to no productivity spillovers, and the same is true of 'efficiency seeking' inward FDI.

Keywords:  FDI motivation, productivity spillovers, technology.

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