Title: The short-run effects of knowledge intensive greenfield FDI on new domestic entry
Citation: JOURNAL OF TECHNOLOGY TRANSFER vol. 43 no. 3 p. 815-836
Publisher: SPRINGER
Publication Year: 2018
JRC N°: JRC106369
ISSN: 0892-9912
URI: https://rd.springer.com/content/pdf/10.1007/s10961-017-9575-y.pdf
DOI: 10.1007/s10961-017-9575-y
Type: Articles in periodicals and books
Abstract: Existing evidence on the impact of foreign direct investment on domestic economies remains ambiguous. Positive technology spillovers of foreign investment may be outweighed by negative crowding out effect due to increased competition. In this paper, we employ a unique country/sector-level data set to investigate the impact of what is considered the ‘best’ type of foreign investment —greenfield knowledge intensive FDI— on domestic entry. Our results suggest that, in the short run, this type of FDI is positively related to the entry rate in the host country, if the domestic sector is either dynamic, or highly R&D intensive. These sectors may be respectively characterized by lower entry costs, which encourage a ‘trial-and-error’ learning business approach, and by a higher level of absorptive capacity which increases the chance of technology transfer.
JRC Directorate:Growth and Innovation

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