FDI Motivation and Knowledge Spillovers to Local Firms

The purpose of this study is to fill an existing gap in research, which ignores the influence of disparate foreign direct investment (FDI) motivations on knowledge spillovers and overlooks its different impacts by technological levels in the literature. In this vein, this study identifies two types of FDI motivations (market-oriented FDI vs export-oriented FDI), classifies industries by technological levels, and then explores spillover effects from foreign investments on local industries. The central findings of this study are that the types of FDI motivation appear to be an important determinant of the effects, but such effects on FDI spillovers are significantly influenced by technological levels. Based on these findings, this study provides managerial as well as important policy implications.