Studies on knowledge spillovers, trade, and foreign direct investment: Theory and empirics

This thesis deals with international knowledge spillovers from advanced countries to developing countries through FDI and trade. Chapter Two develops the theoretical framework to analyze technology spillovers through FDI. This framework shows that FDI affects productivity growth only when it is combined with human capital.; Chapter Three estimates the effects of FDI on productivity growth using data on nine East Asian countries (Korea, Taiwan, Singapore, Hong Kong, Indonesia, Malaysia, the Philippines, Thailand and China). Since productivity growth can be decomposed into efficiency improvement and technological progress, we also evaluate the effects of FDI on them. Our results show that inward FDI is one of the main channels of technology spillovers from advanced countries to developing countries, affecting the host country's productivity growth. Furthermore, this chapter points out that the productivity spillovers are mainly through technological progress rather than efficiency improvement.; Chapter Four explains the theoretical framework for knowledge spillovers through trade. In the framework, there is a nonlinear relationship between productivity and R&D stocks.; Chapter Five empirically investigates knowledge spillovers through trade using industry-level data of Korean and Taiwanese manufacturing. The estimation results show that the overall R&D stocks have significantly large effects on productivity in most categories except the Traditional category. The effects of domestic other-industry R&D stocks are larger than domestic same-industry R&D stocks in the Whole Manufacturing and High-tech categories. Foreign R&D stocks have different effects across categories of manufacturing. In the High-tech category, import-weighted foreign R&D stocks have significant effects.; Chapter Six takes causality tests among productivity, FDI, and trade using the fixed-effects panel vector autoregression (VAR) model. Data are from nine East Asian countries. There are two bidirectional causality relations between productivity growth and imports, and between imports and exports.