The spillover effects from FDI to innovation: Results from two-step system GMM

Abstract

 Foreign direct investment (FDI) is one of the important factors promoting economic growth. In addition to job creation, with the level of technology, management experience, multinational companies are expected to spread the knowledge, thereby spreading to innovation in the host country. This paper examines the impact of foreign direct investment (FDI) on innovation in the host country. The GMM model is used to estimate table data of 80 countries from 2003 to 2018. The estimation results show that foreign direct investment has a positive impact to help accelerate the innovation process creation, even in the case of other macro variables under control.