AbstractTechnology transfer and spillovers and the role of in tangible assets are among the most important issues on the research agenda concerning foreign direct investment (FDI). This thesis examines the relationships between multinational investment, technology transfer, spillovers and economic performance. It does this through econometric analysis using firm level panel datasets from UK manufacturing industries. As such, the work aims to make a contribution to the existing literature on FDI in situations where the host is a developed country. The analysis is essentially broken down into three sub-topics. First, an examination of technology transfer from multinational head quarters to their overseas affiliates is conducted. Next an investigation of spillover effects from foreign affiliates to locally owned firms is undertaken. Finally the thesis compares the performance of foreign subsidiaries with that of their locally owned counterparts.
An initial review of the literature in the field establishes a theoretical framework that is useful in setting up the econometric models. Technology is addressed as a key issue with respect to FDI because its transfer has potentially positive benefits for host countries. Since the context of the study involves multinational investment and growth, the theoretical review highlights the role of technology and spillovers in new growth theory. The literature on technology transfer is also helpful. Here the important roles of intangible assets and human capital are high lighted along with the technological capabilities of locally owned firms.
Using the theoretical framework, empirical models are developed and several propositions are tested. There are a number of important findings from the econometric analysis. First, technology generated in parent firms is transferred to their UK affiliates. The characteristics of the sending and receiving firm and the technology itself are important determinants of the extent of transfer. Secondly, there are intra-industry productivity spillovers from FDI in UK manufacturing industries and there is evidence that spillover effects a re bi-directional. Thirdly, the extent to which local firms benefit from the advanced technology of multinational firms depends on their own technological capabilities. In other words host country benefits from spillovers are negatively related to the technology gap between foreign and locally owned firms. Finally, despite spillover benefits, UK owned firms are still outperformed by their foreign counterparts due to inferior stocks of intangible assets and the failure to exploit scale economies, while the performance of foreign subsidiaries for foreign superiority do vary across nationalities. The thesis draws policy implications from these important findings.
|Date of Award||Jun 2000|