We analyze a model where a multinational firm can use its superior
technology in a foreign subsidiary only after appropriate training
of local managers. Technological spillovers from foreign direct
investment arise when such managers are later hired by a local
firm. Benefits for the host economy may also take the form of the
rent that trained managers receive by the foreign affiliate to
prevent them from moving to local competitors. We study conditions
under which technological spillovers occur. ...
We analyze a model where a multinational firm can use its superior
technology in a foreign subsidiary only after appropriate training
of local managers. Technological spillovers from foreign direct
investment arise when such managers are later hired by a local
firm. Benefits for the host economy may also take the form of the
rent that trained managers receive by the foreign affiliate to
prevent them from moving to local competitors. We study conditions
under which technological spillovers occur. We also show that under
certain circumstances the multinational firm might find it optimal
to resort to export instead of foreign direct investment, to avoid
dissipation of its intangible assets.
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