The Role of FDI on Transferring Technology to Korea

FDI (Foreign direct investment) is one of the most major channels for international technology transfer. Despite its premise of potential gains from FDI, the evidences are rather mixed in the empirical studies of technology diffusion via FDI. The purpose of this paper is to find empirical evidence for the spillover effect by FDI. This paper studies the role of FDI on transferring technology to Korea. This paper explored the importance of FDI, intra-industry knowledge spillovers from FDI, and R&D's learning effect for firm's productivity using firm-level data for the period 1991-1997 and 1999-2004, since Korea experienced great change in late 1990s and the policy for FDI has largely changed. Empirical results showed quite different aspects for after and before. The intra-firm spillover effects were positive for both period, while intra-industry spillover effects were positive and negative for before- and after-period, respectively. The change of intra-industry spillover effects means that the government should concern to utilize foreign investments