The Influence of Technology on Foreign Direct Investment

摘要

Does technology play a role in the location of direct investment? When explaining the existence of multinationals one often notes that these enterprises have inherent advantages, such as technology, over other firms they might compete with in the local economy. So perhaps multinationals look for differences in technology between themselves and their foreign competitors. On the other hand, international organizations, such as the International Monetary Fund and World Bank, often state there must be a minimal amount of technology in emerging market economies for these countries to attract direct investment (DI). One can imagine instances where multinationals might want technology to be close to what they are bringing over so production processes run smoothly. This paper attempts to quantify the role of technology in horizontal and vertical DI decisions.