GEP Research Paper 02/08
Absorptive Capacity and Productivity Spillovers from FDI: A Threshold Regression Analysis
S. Girma
Abstract
The influence of absorptive capacity in productivity spillovers from FDI is explored using recently developed threshold regression techniques. These characterise technology transfer as a non-linear process where the impact of FDI could either be negative, positive or neutral, depending on some critical values of the absorptive capacity distribution. Substantial heterogeneity in the way FDI-induced externalities are distributed across domestic firms in the U.K. is uncovered. There are also additional findings on the importance of exporting , geographic proximity and the motivation of FDI.
Issued in June 2002.
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