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Foreign Direct Investment, Technology Sourcing and Reverse Spillovers
Author(s) -
Driffield Nigel,
Love James H.
Publication year - 2003
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1046/j.1467-9957.2003.00372.x
Subject(s) - foreign direct investment , multinational corporation , spillover effect , externality , investment (military) , business , panel data , industrial organization , economics , international trade , international economics , microeconomics , macroeconomics , finance , politics , political science , law , econometrics
Recent theoretical work points to the possibility of foreign direct investment motivated not by ‘ownership’ advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic‐to‐foreign technological externalities within the host country. We test empirically for the existence of such ‘reverse spillover’ effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning‐by‐doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence.