MARKET 1 Lecture Notes - Lecture 20: Foreign Direct Investment, High Tech, Capital Intensity
Document Summary
Much of the differential can be associated with the larger size of the foreign-owned operations but higher capital intensity and higher inputs of intermediate products, leading to higher productivity, are also important. There are enough indicators of positive wage spillovers to preclude any conclusion that they are typically negative. Effects on average wages: higher degree of foreign ownership could affect the average level of wages in a country or industry. Impact on the host countries in this respect stems mainly from the superior efficiency of the foreign- owned operations: questions to be asked, whether foreign-owned firms or establishments are more efficient. Locally owned firms might increase their efficiency by copying the operations of the foreign-owned firms or be forced by competition from foreign-owned firms to raise their efficiency to survive. Productivity comparisons: examples, mexico: value-added and gross output per employee had been more than twice as high in multinational corporation (mnc) owned plants overall as in private domestic plants.
