Foreign direct investment,technology transfer and domestic employment effects

The paper investigates the relationship between foreign direct investment and domestic employment opportunities within the context of a multinational firm which is involved in transferring technology from its domestic to its foreign operations. The transfer of technology takes the form of a managerial input, which reflects the benefits of learning-by-doing acquired through cumulative gross domestic investment, in the foreign production function. The model predicts a positive domestic employment effect over the longer run because of a favorable interaction which is generated between the firm's domestic and foreign operations as a result of the transfer of managerial expertise.