Spillovers from FDI in Emerging Market Economies

This chapter explores the prospects for technology transfer and spillovers from inward investment in the setting of emerging markets. The chapter builds on the large literature on spillovers to explore the drivers of such effects. First, it is necessary to explore why the analysis of technology transfer between inward investors and local firms is important in the context of emerging market development, and also why a different perspective may be required compared with that developed for traditional economies such as the UK or USA. In doing so, the authors explore issues such as absorptive capacity and institutional quality, e.g., the protection of property rights, and link those to the common issues identified by international business scholars and others in terms of the challenges presented by operating in emerging markets. This, in turn, enables them to explore possible policy responses.