Labour Mobility and Returns to Experience in Foreign Firms*

This paper uses Finnish linked employer–employee panel data to study whether employees are able to appropriate returns to knowledge accumulated in foreign‐owned firms when moving to domestic firms. The estimates indicate that highly educated employees earn a return to prior experience in a foreign‐owned firm, which is over and above the return to other previous experience. These employees do not appear to pay for the knowledge they accumulate in the form of lower starting wages in foreign‐owned firms.     

Spillovers from foreign direct investment: Within or between industries?

This paper contributes an estimation framework to measure both technological and linkage externalities from foreign direct investment (FDI). Empirical research dealt mainly with intra-industry spillovers from FDI with restrictive treatment of inter-industry effects until recently. However, as optimal organization of the multinational corporation (MNC) involves minimization of profit losses due to leakage of technical information to competitors, host-country firms within the MNC's sector experience limited productivity gains ensuing FDI. Host-country producers in other sectors may benefit. For example, MNCs transfer knowledge to local downstream clients, or outsource to local upstream suppliers. Hence, FDI substitutes within-sector domestic investment but complements it across sectors. The net impact on aggregate capital formation by host-country producers hinges on the interaction between linkages and spillovers. Estimations based on the Colombian Manufacturing Census yield the sectoral pattern of FDI spillovers displaying knowledge propagation between but not within industries. The findings reveal outsourcing relationships of MNCs with local upstream suppliers as the channel of diffusion.     

Exploring the Existence of Local and Global Knowledge Spillovers:Evidence from Plant‐Level Data*

We investigate the existence of local (within‐country) and global (between‐country) knowledge spillovers within a single analytical framework. Our study is based on a detailed database of domestically owned and foreign‐affiliated manufacturing plants located in Ireland. The results of our econometric analysis show that domestically owned plants benefit from the research and development (R&D) activities of other domestically owned plants, as well as from R&D activities conducted in the country of origin of foreign‐owned plants through their presence in Ireland. A fundamental difference between such locally generated and locally transmitted global spillovers appears to be that the latter are much less constrained by distance decay effects.     

Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe

Recent evidence suggests that regional economic integration provides an important stimulus not only to trade, but also to FDI. In contrast, the available theory on FDI does not yet provide empirically testable propositions on the effects of concurrent trade and investment liberalisation. Moreover, given the limits of simulation models, which rely heavily upon parameter choice, in assessing the impact of such liberalisation, there is a need for empirical analysis to identify the principal features of FDI. This paper uses a gravity model approach to assess the impact of the deepening integration between the EU and the CEECs on FDI flows in terms of three key issues. First, we provide systematic estimates of the expected long-term level of FDI in the CEECs. Second, we investigate whether FDI in the CEECs, on the one hand, and source country exports and imports, on the other hand, are complements or substitutes. Finally, we enquire whether an increase in the attractiveness of the CEECs to foreign investors has affected the magnitude of FDI going to other European countries.