The paper studies the correlations between FDI in services and manufacturing efficiencies in host countries. First a theoretical analysis is presented on the direct and indirect channels through which FDI in services enhances manufacturing efficiencies in host countries. Then the forward linkages and backward linkages between FDI in services and manufacturing sector in host countries are tested...

This paper estimates the impact of foreign direct investment (FDI) on capital accumulation, and output and total factor productivity (TFP) growth in the recipient economy. Time series and panel data evidence are provided for a sample of OECD and non-OECD countries in the period 1970±90. Although FDI is expected to boost long-run growth in the recipient economy via technological upgrading and kn...

Central and Eastern European (CEE) countries are in an economic transition process which involves convergence of economic performance with the European Union. One of the principle engines for the necessary transformation towards EU average economic performance is inward-FDI. Quantitatively examining the causes of FDI in the CEE region is thus an important research area. Traditional linear regre...

This paper quantitatively investigates the impact of falling FDI barriers on changes in intra-industry reallocations and aggregate productivity growth. Expanding on our earlier work (Arita and Tanaka 2011), we calibrate an adapted version of Eaton, Kortum, and Kramarz’s (2011) general equilibrium model of heterogeneous firms to Japanese multinational firms facing fixed and variable FDI barriers...

FDI flows grew exponentially during the 1990s, experienced a sharp decline over the period 20012004, and have recently started to recover. The decline was mostly due to a fall in FDI flows within the OECD, particularly of FDI flows to continental Europe. In recent years, FDI flows to developing countries have also increased substantially. This trend has been encouraged by governments who view i...

This paper aims to explore the role of spillovers in the strategic choice for a MNE in a duopoly model, especially focusing on endogenous FDI spillovers with spillover-prevention costs. After discussing the exogenous spillover case, this paper shows that with a quadratic spillover-prevention cost function, the FDI-performing firm may choose a positive level of spillovers, which is lower than th...

What impact does foreign direct investment (FDI) have on indigenous technological creation? Despite the answer to this question is both academically interesting and practically important, systematic empirical studies are lacking. This study attempts to help fill this gap by conducting an empirical investigation of the effects of FDI on indigenous technological creation using a firm-level survey...

This chapter provides an empirical analysis of interactions between FDI flows and domestic investment in capacity. As a motivation for the empirical analysis, I provide highlights of a new theory of FDI. The theory captures unique feature: hands-on management standards, that enable investors to react in real time to ongoing changes in the economic environment, which surrounds investors. Equippe...

By bridging the gap between domestic savings and investment and bringing the latest technology and management know-how from developed countries, foreign direct investment (FDI) can play an important role in achieving rapid economic growth in developing countries. The fact is that developing countries have not been considered as favorable destinations for FDI, as FDI mostly goes to developed cou...

Coastal cities have been at the forefront of China’s economic reform and open-door policy. However, regional differences in cost and income have prompted the government to encourage interior development since the late 1990s. Foreign direct investment (FDI) is one of the most mobile forms of capital and is a key agent of urban spatial transformation in China. This paper examines intra-metropolit...