Foreign Direct Investment, Technological Change, and Economic Growth within Europe

17 Pages Posted: 28 Jan 2012

See all articles by Ray Barrell

Ray Barrell

National Institute of Economic and Social Research (NIESR)

Nigel Pain

National Institute of Economic and Social Research (NIESR)

Date Written: November 1997

Abstract

The extent of multinational activity and the share of world trade accounted for by multinational enterprises has risen steadily over the past two decades. This has led to renewed interest within Europe in the impact of multinational enterprises on employment, investment and trade, and the structure of economic growth. In this paper we discuss the factors behind the continued growth of foreign direct investment and its wider consequences on home and host economies. We report evidence on the impact of production relocation on the export performance of a number of OECD economies, and investigate the extent to which technology transfer from foreign‐owned firms has affected the rate of technical progress within the German and UK economies. The acquistion of firm‐specific knowledge‐based assets is found to be an important factor behind the growth of FDI, suggesting that such investments are likely to be an important channel for the diffusion of ideas and technologies.

Suggested Citation

Barrell, Ray and Pain, Nigel, Foreign Direct Investment, Technological Change, and Economic Growth within Europe (November 1997). The Economic Journal, Vol. 107, Issue 445, pp. 1770-1786, 1997. Available at SSRN: https://ssrn.com/abstract=1994229 or http://dx.doi.org/10.1111/j.1468-0297.1997.tb00081.x

Ray Barrell (Contact Author)

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom
0171 222 7665 (Phone)
0171 654 1900 (Fax)

Nigel Pain

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London SW1P 3HE
United Kingdom
0171 222 7665 (Phone)
0171 654 1900 (Fax)

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