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Technology diffusion and host–country productivity in South-South FDI flows

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  • Kim, Hyuk-Hwang
  • Lee, Hongshik
  • Lee, Joonhyung

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.

Suggested Citation

  • Kim, Hyuk-Hwang & Lee, Hongshik & Lee, Joonhyung, 2015. "Technology diffusion and host–country productivity in South-South FDI flows," Japan and the World Economy, Elsevier, vol. 33(C), pages 1-10.
    • Handle: RePEc:eee:japwor:v:33:y:2015:i:c:p:1-10
    DOI: 10.1016/j.japwor.2014.11.001
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    3. Songping Zhu & Azhong Ye, 2018. "Does Foreign Direct Investment Improve Inclusive Green Growth? Empirical Evidence from China," Economies, MDPI, vol. 6(3), pages 1-16, August.

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    More about this item

    Keywords

    Technology spillover; FDI; South-South; Total factor productivity (TFP);
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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