The Work of Haskel, Pereira and Slaughter on the Effects of Foreign Direct Investment

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Recommended: Introduction of foreign direct investment

Foreign direct investment (FDI), which can be defined as a foreign company purchasing a company or starting a business (in production or services via full ownership or alliances) in another country and exercising its proprietary and operational rights over the business. De Mello Jr. (1997) summates FDI as being an amalgamation of technology, capitol stocks and the skill of knowing how to get things done. Inward FDI describes the flow of the investment to the recipient or host country. In essence, the host country receives the new business entity and all that it brings with it; both its positive and negative impact. Research such as that of Bengoa and Sanchez-Robles (2007) has linked FDI to positive economic growth in host countries. This essay will analyse and evaluate the argument and methodology of the authors Haskel, Pereira, and Slaughter (2007).

Literature Review/Theoretical Foundations

The work of Haskel, Pereira, and Slaughter (2007) was reviewed. This work set out to examine some questions. They wanted to know if productivity spillovers from FDI to local companies existed in the industry and in the region and in order to draw FDI what amount should a country be prepared to pay and offer in incentives. The research seemed to gloss over the second question but strongly focused on the first. After the first two pages or so it focused on the question of productivity. There was no conclusive answer at the end to what level of expenditure should be put forward to attract FDI. It was inferred though that the incentives paid by England are excessive in comparison to what it gets back. The title of the article was a little misleading in that it gave a narrower impression of what the research entailed. A better title perhaps ...

... middle of paper ...

...99), ‘Foreign direct investment in developing countries and growth: A selective survey’, Journal of Development Studies, 34(1), pp. 1 -34, Taylor and Francis [Online]. Available at: http://www.tandfonline.com.ezproxy.liv.ac.uk/doi/abs/10.1080/00220389708422501 (Accessed: 20 July 2011).

Gorg, H. and Greenaway, D., (2004) ‘Much ado about nothing? Do domestic firms really benefit from foreign direct investment?’, World Bank Research Observer, 19 (2), pp. 171- 197, [Online]. Available at: http://wbro.oxfordjournals.org/content/19/2/171.short (Accessed: 20 July 2011).

Haskel, J. E., Pereira, S.C., Slaughter, M. J. (2007) ‘Does inward foreign direct investment boost the productivity of domestic firms?’, Review of Economics and Statistics, 89(3), pp.482-496, [Online]. Available at: http://dx.doi.org.ezproxy.liv.ac.uk/doi:10.1162/rest.89.3.482 (Accessed: 18 July 2011).

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