Last updated on Sep 30, 2024

How do foreign direct investment spillovers affect local firms' productivity and innovation?

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Foreign direct investment (FDI) is a major source of capital, technology, and knowledge for developing countries. But how does it affect the performance and innovation of local firms in the host country? This is the question of FDI spillovers, which are the positive or negative externalities that arise from the presence and activities of foreign investors. In this article, we will explore the main channels and mechanisms of FDI spillovers, the factors that influence their magnitude and direction, and the policy implications for host countries.

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