Innovative and Absorptive Capacity of International Knowledge : An Empirical Analysis of Productivity Sources in Latin American Countries
This paper examines two sources of global knowledge spillovers: foreign direct investments and trade. Empirical evidence demonstrates that foreign direct investment and trade can contribute to overall domestic productivity growth only when the tech...
| Main Authors: | , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120103140509 http://hdl.handle.net/10986/3217 |
| Summary: | This paper examines two sources of
global knowledge spillovers: foreign direct investments and
trade. Empirical evidence demonstrates that foreign direct
investment and trade can contribute to overall domestic
productivity growth only when the technology gap between
domestic and foreign firms is not too large and when a
sufficient absorptive capacity is available in domestic
firms. The paper proposes the terms research and development
and labor quality to capture the innovative and absorptive
capacity of the country. The spillover effects in
productivity are analyzed using a stochastic frontier
approach. This productivity (in terms of total factor
productivity) is decomposed using a generalized Malmquist
output oriented index, in order to evaluate the specific
effect in technical change, technical efficiency change, and
scale efficiency change. Using country-level data for 16
Latin American countries for 1996-2006, the empirical
analysis shows positive productivity spillovers from foreign
direct investment and trade only when the country has
absorptive capacity in terms of research and development.
Foreign direct investment and trade spillovers are found to
be positive and significant for scale efficiency change and
total productivity factor change. |
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