Multinationals, Endogenous Growth, and Technological Spillovers: Theory and Evidence
Richard E. Baldwin
University of Geneva - Graduate Institute of International Studies (HEI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
Research Institute of Industrial Economics (IUI); Ministry of Finance
Stockholm University - Department of Economics; Lund University - Department of Economics; Centre for Economic Policy Research (CEPR)
Review of International Economics, Vol. 13, No. 5, pp. 945-963, November 2005
FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with MNCs, e.g. the Grossman-Helpman model, assume away the knowledge-spillovers aspect of FDI. We also present econometric evidence (using industry-level data from seven OECD nations) that broadly supports the model. Specifically, we find industry-level scale effects and international knowledge spillovers that are unrelated to FDI, but we also find that bilateral spillovers are boosted by bilateral FDI.
Number of Pages in PDF File: 19Accepted Paper Series
Date posted: December 29, 2005
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.641 seconds