FDI,Technology Spillovers,and Wages |
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| Authors: | Dieter M. Urban |
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| Affiliation: | 1. RWTH Aachen University, Germany;2. I acknowledge financial support from the EU Commission, fifth framework program (project FLOWENLA). I am grateful for the comments of two anonymous referees, Laszlo Goerke, Martin Kolmar, Pehr‐Johan Norb?ck, and participants of workshops at HWWA, CEPS, and at the ETSG meeting in Nottingham. The usual disclaimer applies. |
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| Abstract: | This study distinguishes multinational firm (MNE) technology‐spillover from learning effects. Whenever learning takes time, the model predicts that foreign investors deduct the economic value of learning from wages of inexperienced workers and add it to experienced ones to prevent them from moving to local competitors. Hence, the national wage bill is unaffected by the presence of MNEs. In contrast to learning, technology spillover effects occur whenever a worker with MNE experience contributes more to local firms' than to MNEs' productivity. In this case, experienced MNE workers are hired by indigenous firms and the host country obtains a welfare gain from the presence of MNEs. |
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