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FDI spillovers, absorptive capacities and human capital development: Evidence from Argentina

This study uses empirical data to analyse the extent to which technological spillovers occur as a result of foreign direct investment (FDI) in Argentina. It discusses why FDI is often assumed to be fundamental to human capital formation and technological development in developing countries.

The authors argue that FDI may not be the most effective instrument to foster technological development. They observe that FDI spillovers are not extensive and that they depend on multinational corporations' assets and investment decisions as well as domestic firms' absorptive capacity, as indicated by their investment in training and equipment.

One of the study's key conclusions is that only those firms that have invested heavily in improving their absorptive capacity will receive positive spillovers from FDI.

The authors suggest that governments must make broader efforts to promote local firms and science and technology organisations, and improve the links between these.