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CEP discussion paper
Productivity Convergence and Foreign Ownership at the Establishment Level
Rachel Griffith, Stephen J. Redding and Helen Simpson June 2003
Paper No' CEPDP0573:
Full Paper (pdf)

JEL Classification: F23;O33;O47

Tags: foreign direct investment (fdi); knowledge spillovers; competition

This paper investigates whether there is convergence in Total Factor Productivity towards the technological frontier at the establishment level. We find convergence to the frontier is statistically and quantitatively important, suggesting the existence of technology spillovers. Foreign multinationals make up a significant proportion of establishments at the technological frontier, and therefore make a contribution to productivity growth through technology transfer. We also find evidence that increased foreign presence within an industry raises the speed of convergence to the technological frontier.