Abstract
This paper investigates the effects of foreign direct investment (FDI) on the host country's economic performance, namely, its total factor productivity (TFP). Such effects are often referred to as FDI externalities or spillover effects. In addition, the paper examines whether such spillover effects depend on the home country's income level. Our empirical findings indicate that FDI flows have positive effects on less developed countries (South countries), and that the effect of FDI flows from the developed countries (North countries) is stronger than that from less developed countries. That is, these results confirm the so-called North-South effects but provide no evidence of South-South effects. Furthermore, another channel of spillover effects is imports, which have significant effects on TFP.
| Original language | English |
|---|---|
| Pages (from-to) | 1-10 |
| Number of pages | 10 |
| Journal | Japan and the World Economy |
| Volume | 33 |
| DOIs | |
| Publication status | Published - 2015 Feb 1 |
Bibliographical note
Funding Information:We thank Akiko Terada-Hagiwara, Peter Morgan, Douglas H. Brooks, and Joseph E. Zveglich for their helpful suggestions, and the anonymous referees and the participants at the Asian Development Bank's Forum on South-South Economic Linkages for their valuable comments. This work was supported by the National Research Foundation of Korea Grant, and funded by the Korean Government ( NRF-2010-330-B00081 ) and the Asian Development Bank . All remaining errors are our own.
Publisher Copyright:
© 2014 Elsevier B.V.
Keywords
- FDI
- South-South
- Technology spillover
- Total factor productivity (TFP)
ASJC Scopus subject areas
- Finance
- Economics and Econometrics
- Political Science and International Relations
