Inaugurates a series of academic treatments of international investment in Canada and elsewhere, the impact of globalization on Canada, and policy and research issues. The 11 papers, plus discussions and the rapporteur's comments, are from a September 1990 conference in Ottawa. They explore how the innovative capacities of a host country are affected by direct foreign investment, focusing on the Canadian experience and the role of its government policy. No index. Annotation copyrighted by Book News, Inc., Portland, OR

Abstract: May 2000 - How much a developing country can take advantage of technology transfer from foreign direct investment depends partly on how well educated and well trained its workforce is, how much it is willing to invest in research and development, and how much protection it offers for intellectual property rights. Saggi surveys the literature on trade and foreign direct investment - especially wholly owned subsidiaries of multinational firms and international joint ventures - as channels for technology transfer. He also discusses licensing and other arm's-length channels of technology transfer. He concludes: How trade encourages growth depends on whether knowledge spillover is national or international. Spillover is more likely to be national for developing countries than for industrial countries; Local policy often makes pure foreign direct investment infeasible, so foreign firms choose licensing or joint ventures. The jury is still out on whether licensing or joint ventures lead to more learning by local firms; Policies designed to attract foreign direct investment are proliferating. Several plant-level studies have failed to find positive spillover from foreign direct investment to firms competing directly with subsidiaries of multinationals. (However, these studies treat foreign direct investment as exogenous and assume spillover to be horizontal - when it may be vertical.) All such studies do find the subsidiaries of multinationals to be more productive than domestic firms, so foreign direct investment does result in host countries using resources more effectively; Absorptive capacity in the host country is essential for getting significant benefits from foreign direct investment. Without adequate human capital or investments in research and development, spillover fails to materialize; A country's policy on protection of intellectual property rights affects the type of industry it attracts. Firms for which such rights are crucial (such as pharmaceutical firms) are unlikely to invest directly in countries where such protections are weak, or will not invest in manufacturing and research and development activities. Policy on intellectual property rights also influences whether technology transfer comes through licensing, joint ventures, or the establishment of wholly owned subsidiaries. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to study microfoundations of international technology diffusion. The study was funded by the Bank's Research Support Budget under the research project Microfoundations of International Technology Diffusion. The author may be contacted at [email protected].

We test the effect of foreign direct investment (FDI) on economic growth in a cross-country regression framework, utilizing data on FDI flows from industrial countries to 69 developing countries over the last two decades. Our results suggest that FDI is an important vehicle for the transfer of technology, contributing relatively more to growth than domestic investment. However, the higher productivity of FDI holds only when the host country has a minimum threshold stock of human capital. In addition, FDI has the effect of increasing total investment in the economy more than one for one, which suggests the predominance of complementarity effects with domestic firms.

China and India have both received a great amount of focus from the foreign investors. However, there are acute differences in the implementation of the economic reforms; China made rapid progress in the manufacture of high technology products, whilst India progressed in the development of high technology. This book explores the contrasts between China and India in attracting, utilizing and related issues and discusses the challenges faced by the foreign investors.

What role does trade play in international technology transfer? Do technologies introduced by multinational firms diffuse to local firms? What kinds of policies have proved successful in encouraging technology absorption from abroad and why? Using these questions as motivation, this article surveys the recent trade literature on international technology transfer, paying particular attention to the role of foreign direct investment. The literature argues that trade necessarily encourages growth only if knowledge spillovers are international in scope. Empirical evidence on the scope of knowledge spillovers (national versus international) is ambiguous. Several recent empirical plant-level studies have questioned earlier studies that argued that foreign direct investment has a positive impact on the productivity of local firms. Yet at the aggregate level, evidence supports the view that foreign direct investment has a positive effect on economic growth in the host country.

This book examines the politics of technology, and provides a detailed analysis of developments and debates within the European Union, international trade and governance. An important empirical contribution to the literature on the relations between politics and technology, this volume contains empirical statistical studies based on a wide variety of different types of data, and includes expert contributions from different academic disciplines. With a selection of detailed case studies, this book is divided into three main sections: The first part presents contributions on the role of domestic national policies for innovation and idea diffusion, including studies on Japan and the European Union. The second part takes a critical look at how the international system of intellectual property rights access to knowledge, opportunities for development and health improvement, examining the TRIPS agreement and the European patent system. The third part focuses on the role of foreign direct investment in innovation and idea diffusion, with studies on a wide range of cases using different, novel data material. Governance and Knowledge will be of interest to students, scholars and policy-makers of European politics, political economy, international trade, governance and economics.