Technology Spillover and Absorptive Capacity of Firms and Countries

25 Pages Posted: 2 Sep 2022

See all articles by Shujiro Urata

Shujiro Urata

Waseda University-Graduate School of Asia-Pacific Studies

Youngmin Baek

affiliation not provided to SSRN

Date Written: June 2022

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.

Keywords: foreign direct investment, technology transfer, absorptive capacity

JEL Classification: D22, F21, O3, R1

Suggested Citation

Urata, Shujiro and Baek, Youngmin, Technology Spillover and Absorptive Capacity of Firms and Countries (June 2022). ADBI Working Paper 1323, Available at SSRN: https://ssrn.com/abstract=4204193 or http://dx.doi.org/10.2139/ssrn.4204193

Shujiro Urata (Contact Author)

Waseda University-Graduate School of Asia-Pacific Studies ( email )

1-21-1 Nishiwaseda
Shinjuku-ku, Tokyo 169-8050
Japan

Youngmin Baek

affiliation not provided to SSRN ( email )

No Address Available

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