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The importance of international technology diffusion (ITD) for economic development can hardly be overstated. Both the acquisition of technology and its diffusion foster productivity growth. Developing countries have long sought to use both national policies and international agreements to stimulate ITD. The ?correct? policy intervention, if any, depends critically upon the channels through which technology diffuses internationally and the quantitative effects of the various diffusion processes on efficiency and productivity growth. Neither is well understood. New technologies may be embodied

Economic production --- International economic relations --- Developing countries --- International economic integration. --- International trade. --- Investments, Foreign --- Technology transfer --- Industrial productivity --- Economic aspects --- Effect of technological innovations on --- Productivity, Industrial --- TFP (Total factor productivity) --- Total factor productivity --- Industrial efficiency --- Production (Economic theory) --- External trade --- Foreign commerce --- Foreign trade --- Global commerce --- Global trade --- Trade, International --- World trade --- Commerce --- Non-traded goods --- Common markets --- Economic integration, International --- Economic union --- Integration, International economic --- Markets, Common --- Union, Economic

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"This paper uses micro data from the Indonesian Census of Manufacturing to analyze the causal relationship between foreign ownership and plant productivity. To control for the possible endogeneity of the FDI decision, the difference in differences approach is combined with a matching technique. An advantage of this novel method is the ability to follow the timing of the observed changes in productivity and other aspects of plant performance. The results suggest that foreign ownership leads to significant productivity improvements in the acquired plants. The improvements become visible in the acquisition year and continue in the subsequent periods. After three years, the acquired plants outperform the control group in terms of productivity by 34 percentage points. The data also suggest that the rise in productivity is a result of restructuring, as acquired plants increase their investment outlays, employment, and wages. Foreign ownership also appears to enhance the integration of plants into the global economy through increased exports and imports. "--World Bank web site.

Exports --- Industrial productivity --- International business enterprises

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Trademarks.

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"Javorcik, Saggi, and Spatareanu use a firm-level panel data set from Romania to examine whether the nationality of foreign investors affects the degree of vertical spillovers from foreign direct investment. Investors' country of origin may matter for spillovers to domestic producers in upstream sectors (supplying intermediate inputs) in two ways. First, the share of intermediate inputs sourced by multinationals from a host country is likely to increase with the distance between the host and the source economy. Second, the sourcing pattern is likely to be affected by preferential trade agreements that cover some but not other source economies. In this case, the Association Agreement signed between Romania and the European Union (EU) implies that inputs sourced from the EU are subject to a lower tariff than inputs sourced from America or Asia. Moreover, while for European investors intermediate inputs sourced from home country suppliers comply with the rules of origin and thus can be exported to the EU on preferential terms, this would not be the case for home country suppliers of American or Asian multinationals. Therefore, one would expect that American and Asian investors source more from Romania than EU investors and thus present greater potential for vertical spillovers. The empirical analysis produces evidence in support of the authors' hypothesis. They find a positive association between the presence of American and Asian companies in downstream sectors and the productivity of Romanian firms in the supplying industries. Further, the productivity of Romanian firms in the supplying sectors is negatively correlated with operations of European investors in downstream sectors. The differences between the effects associated with investors of different origin are statistically significant. This paper--a product of the Trade Team, Development Research Group--is part of a larger effort in the group to study the effects of foreign direct investment on developing countries"--World Bank web site.

Capitalists and financiers --- Investments, Foreign

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"This paper uses micro data from the Indonesian Census of Manufacturing to analyze the causal relationship between foreign ownership and plant productivity. To control for the possible endogeneity of the FDI decision, the difference in differences approach is combined with a matching technique. An advantage of this novel method is the ability to follow the timing of the observed changes in productivity and other aspects of plant performance. The results suggest that foreign ownership leads to significant productivity improvements in the acquired plants. The improvements become visible in the acquisition year and continue in the subsequent periods. After three years, the acquired plants outperform the control group in terms of productivity by 34 percentage points. The data also suggest that the rise in productivity is a result of restructuring, as acquired plants increase their investment outlays, employment, and wages. Foreign ownership also appears to enhance the integration of plants into the global economy through increased exports and imports. "--World Bank web site.

Exports --- Industrial productivity --- International business enterprises