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Technology Spillover and Absorptive Capacity of Firms and Countries

Author

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  • Urata, Shujiro

    (Asian Development Bank Institute)

  • Baek, Youngmin

    (Asian Development Bank Institute)

Abstract

We examine the foreign direct investment (FDI) spillover effects in developing countries and investigate the importance of the absorptive capacity of a firm and a country in realizing and facilitating FDI spillover. We use data obtained from the World Bank’s Enterprise Surveys for 107 countries from 2007 to 2020. We find that firms in developing countries do not benefit from horizontal FDI but benefit from forward and backward vertical FDI. We also find that firms can benefit from horizontal, forward, and backward FDI by improving the absorptive capacity of firms and host countries. Based on these findings, we present several recommendations to help firms benefit from FDI spillover.

Suggested Citation

  • Urata, Shujiro & Baek, Youngmin, 2022. "Technology Spillover and Absorptive Capacity of Firms and Countries," ADBI Working Papers 1323, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:1323
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    References listed on IDEAS

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    More about this item

    Keywords

    foreign direct investment; technology transfer; absorptive capacity;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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