Local Technological Capability and Productivity Spillovers from FDI in the Uruguayan Manufacturing Sector

Abstract

The predominant view in the literature on foreign direct investment is that various types of spillover may provide important benefits for the countries that host foreign multinational corporations. For example, numerous case studies have shown that the technology and productivity of local firms may improve as foreign firms enter the market and demonstrate new products and technologies, provide technical assistance to their local suppliers and customers, and train workers and managers who are later employed by local firms. There are also reports that the competitive pressure exerted by foreign affiliates has forced local firms to operate more efficiently and introduce new technologies earlier than would otherwise have been the case (see Chapter 8 for a review of the literature).