Efficiency externalities of trade and alternative forms of foreign investment in oecd countries

Krishna G. Iyer, Alicia N. Rambaldi, Ki Tang Kam

Research output: Contribution to journalArticlepeer-review

23 Citations (Scopus)

Abstract

The literature on the spillover effects of trade and inflows of foreign direct investment (FDI) has concentrated on technological externalities. Little effort has been directed towards identifying their efficiency externalities. This paper measures the efficiency externalities of trade and various forms of foreign investment for a sample of 20 OECD countries between 1982 and 2000 using a stochastic frontier approach. Trade and all foreign investment inflows are found to enhance efficiency, whereas outflows of FDI are found to exacerbate inefficiency. The efficiency externalities from foreign investment are contingent on the absorptive capacity of the host economies.

Original languageEnglish
Pages (from-to)749-766
Number of pages18
JournalJournal of Applied Econometrics
Volume23
Issue number6
DOIs
Publication statusPublished - Sep 2008
Externally publishedYes

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