Industrial transformation with heterogeneous labour and foreign experts

Lim, K. ORCID: 0000-0003-1978-176X, 2017. Industrial transformation with heterogeneous labour and foreign experts. In: 66th Annual Congress of the French Economic Association (AFSE), Université Côte d’Azur (UCA), Nice, France, 19-21 June 2017.

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This paper develops an imitation-innovation model with heterogeneous labour and foreign MNCs to examine industrial transformation for a developing host economy. With FDI modelled at the disaggregated level of foreign experts, we formalise a MNC composition-determination framework that explains Dunning’s ‘internalisation advantage’ (from his renowned Eclectic Paradigm) as being driven by the presence of asymmetric views on productivity of domestic workers. As the skills acquisition decision and foreign subsidiaries’ operational mode choice are determined along the same ability distribution in the model, policy complementarities between human capital and FDI-promoting policies are established using calibrated analysis. Further, an additional asymmetry between Vertical MNCs and other MNCs leads to policy dynamics that favour balanced, broad-based FDI-promoting policies over those disproportionate ones biased towards selected types of foreign firms. Also, the policy complementarities uncovered are stronger with endogenous technological change.

Item Type: Conference contribution
Creators: Lim, K.
Date: June 2017
Divisions: Schools > Nottingham Business School
Record created by: Jonathan Gallacher
Date Added: 07 Nov 2019 15:17
Last Modified: 07 Nov 2019 15:17

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