Host Country Benefits of Foreign Investment

This paper reviews the empirical evidence on the very different conclusions that can be drawn about productivity spillovers of foreign direct investment. It explains the concept of host country spillover benefits, describes the various forms these benefits can take, both within and between industries, and summarizes the evidence regarding the relative magnitudes of the various forms of spillovers. Moreover, the paper discusses host country policy measures which can accelerate both the BC affiliates' technology imports and the diffusion of their technology in the host economies.