FDI And International Knowledge Diffusion

As an important engine of global economic growth,the role of FDI in international knowledge transfer and diffusion has been widely concerned by scholars.However,most of the previous studies focused on the knowledge spillover effect of FDI on the host country,and a small body of literature studied the reverse knowledge spillover effect of FDI from developing countries on the source countries.However,existing studies rarely investigated the international knowledge diffusion effect of FDI on both the host country and the source country.Motived by this fact,this paper studies the role of FDI in international knowledge diffusion from the perspective of the evolution of comparative advantage between the host country and the source country.This paper uses the similarity of comparative advantage between the host country and the source country to measure the degree of international knowledge diffusion.On the basis of the knowledge diffusion theory,FDI theory and comparative advantage theory,we propose two hypotheses: the larger the FDI scale between two countries,the more similar the comparative advantage between them;FDI has a heterogeneous effect on the international knowledge diffusion,compared with FDI between countries with the very different development level,FDI between countries with similar development level has more significant effect on the similarity of comparative advantage between them.By screening 21115 country pairs and 253380 observations from 206 countries over the period 2001-2012,this paper has finally obtained 876 country pairs and 5282 observations from 99 countries.Then,we use the spatial autoregressive(SAR)model to test the theoretical hypotheses.The empirical results are completely consistent with the theoretical hypothesis and these results are found to be highly robust.