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Title: Multinationals, Endogenous Growth and Technological Spillovers: Theory and Evidence

Author(s): Richard Baldwin, Henrik Braconier and Rikard Forslid

Publication Date: May 1999

Keyword(s): Endogenous Growth, Multinationals, Spillovers and Technology Transfer

Programme Area(s): International Trade and Regional Economics

Abstract: FDI has received surprisingly little attention in theoretical and empirical work on openness and growth. This paper presents a theoretical growth model where MNCs directly affect the endogenous growth rate via technological spillovers. This is novel since other endogenous growth models with MNCs, e.g. the Grossman-Helpman model, assume away the knowledge-spillovers aspect of FDI. We also present econometric evidence (using industry-level data from seven OECD nations) that broadly supports the model. Specifically, we find industry-level scale effects and international knowledge spillovers that are unrelated to FDI, but we also find that bilateral spillovers are boosted by bilateral FDI.

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Bibliographic Reference

Baldwin, R, Braconier, H and Forslid, R. 1999. 'Multinationals, Endogenous Growth and Technological Spillovers: Theory and Evidence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2155