DP3805 Multinational Enterprises, International Trade and Productivity Growth: Firm-Level Evidence from the US

Author(s): Wolfgang Keller , Stephen R Yeaple

Publication Date: February 2003

Keyword(s): technology spillovers , foreign direct investment , learning externalities

JEL(s): F10 , F20 , O30

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP3805.asp

We estimate international technology spillovers to US manufacturing firms via imports and foreign direct investment (FDI) between the years 1987-96. In contrast to earlier work, our results suggest that FDI leads to significant productivity gains for domestic firms. The size of FDI spillovers is economically important, accounting for about 14% of productivity growth in US firms between 1987-96. In addition, there is some evidence for imports-related spillovers, but it is weaker than for FDI. The Paper also gives a detailed account of why our study leads to results different from those found in previous work. This analysis indicates that our results are likely to generalize to other countries and periods.