International Trade, Foreign Direct Investment, and Technology Spillovers

Wolfgang Keller

NBER Working Paper No. 15442
Issued in October 2009
NBER Program(s):Economic Fluctuations and Growth, Industrial Organization, International Trade and Investment, Productivity, Innovation, and Entrepreneurship

This paper examines how international flows of technological knowledge affect economic performance across industries and firms in different countries. Motivated by the large share of the world's technology investments made by firms that are active across borders, we focus on international trade and multinational enterprise activity as conduits for technological externalities, or spillovers. In addition to reviewing the recent empirical research on technology spillovers, the discussion is guided by a new model of foreign direct investment, trade, and endogenous technology transfer. We find evidence for technology spillovers through international trade and the activity of multinational enterprises. The analysis also highlights challenges for future empirical research, as well as the need for additional data on technology and innovation.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w15442

Published: International Trade, Foreign Direct Investment, and Technology Spillovers, Chapter 19 in B. Hall, N. Rosenberg (eds.), Handbook of the Economics of Innovation, Elsevier North-Holland, 2010

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