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Foreign direct investment, informality and technology transfer

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  • Ceyhun Elgin

Abstract

Foreign direct investment (FDI) is generally associated with technology transfer as well as the diffusion of technology and know‐how in host countries. In this paper we first show that this is true only in countries where the informal sector is relatively small. After establishing this empirical fact, we incorporate FDI, informality, and technology transfer into a multi‐country dynamic general equilibrium model and estimate key model parameters using some cross‐country micro‐ and macro‐level evidence. We then use the calibrated model to quantify the quantitative impact of varying informal sector size on technology transfer through FDI.

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  • Ceyhun Elgin, 2021. "Foreign direct investment, informality and technology transfer," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 994-1015, May.
    • Handle: RePEc:bla:rdevec:v:25:y:2021:i:2:p:994-1015
    DOI: 10.1111/rode.12742
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    Cited by:

    1. Shahid Iqbal & Abdul Qayyum Khan & Muhammad Yar Khan & Lamya Al-Aali, 2021. "The Dynamics of Financial Development, Government Quality, and Economic Growth in Different Groups of Economies," Sustainability, MDPI, vol. 13(14), pages 1-14, July.
    2. Joseph Mawejje, 2024. "Government expenditure, informality, and economic growth: Evidence from Eastern and Southern African countries," African Development Review, African Development Bank, vol. 36(1), pages 125-138, March.
    3. Feng, Ya & Wen, Junqi, 2023. "Foreign direct investment and employee income share: Firm-level evidence," Finance Research Letters, Elsevier, vol. 55(PA).

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