•“How much should host countries should be willing to pay to attract FDI?”
The authors’ use a panel study of UK as an example and concluded if increasing 10% in foreign affiliate share of activity, the TFP in the industry’s domestic plants will increase by 0.5% as well. It shows that there’s a sturdy and positive spillover effect on inward FDI boosting the productivity in domestic plants.
Robert E. Lipsey and Fredrik Sjoholm, (2004) stated “case studies offer great flexibility.” The nature of technology transfer may be various from different examples, industries, and countries. “The length of time for the transfer to occur and be measured which do not need to be specified in advance and can vary widely”.
Also, Blonigen and Wang (2005) stated that comparing in volume and nature, inward FDI in LDC (Less Developed Countries) is differenced from DC (Developed Countries) and may have different impacts in results. Therefore, in this case study, the author used the plant level panel to assess improvement in productivity and use UK manufacturing plans between 1973 and 1992 as the case study to evaluate and analyses may work only on this case but not with others LDC such as China, Indonesia or India. As Blonigen and Wang (2005) said, “Pooling data from DCs and LDCs might disguise the true effects of inward FDI in these two groups of countries”.
From Miao Wang’s research (2010), LDCs might lack of domestic investment’s adequate level in comparing with DCs. Without FDI, the local firm in DLCs will also make investments as well. Miao used Intel as an example, where in Costa Rica, they build the microprocessor plant. As they are very unique in that industry, there are no any other local firms replacing them in its host country. From this case, it shows that there’s a stronger effect of inward FDI occurring in less...