GP - Knowledge spillover mechanism

Question 1

Name the 2 KS and their pathways

Answer 1

1) horizontal: through demonstrations, conferences, training programs, informal chatter
OR through labor mobility as a leader attracts skilled labor (might be rare)
2) vertical: value chain upgrade: leader attracting supplier or invests directly in their own supplier

Question 2

how are the different effect of KS for different types of FDI?

Answer 2

Greenfield:greatest short term potential
JV: greatest overall potential

Question 3

expected benefits from spillover

Answer 3

productivity, efficiency, product/service quality, lower costs, more revenues

Question 4

what is the difference between horizontal and vertical KS?

Answer 4

horizontal: spread of knowledge across similar firms or industries
vertical: knowledgeflows between firms orentities at different stages in the value chain

Question 5

How does knowledge spillovers depend on absorptive capacity and foreign firm presence?

Answer 5

high absorptive capacity: high HSO with high foreign firm presence vs. low SO with low foreign firm presence
low absorptive capacity: negative HSO when high foreign firm presence and no SP when low foreign firm presence

Question 6

Which role does the knowledge gap play in terms of absorptive capacity?

Answer 6

knowledge gap increases, KS increases but just until certain limit where the absorptive capacity is reached. then it might actually decrease

relationship is an inverted u!

Question 7

what about labor mobility?

Answer 7

• greater mobility boosts FDI firms employment
• greater horizontal mobility posetively affects productivit
• > when experience > HC, older people might be more benefitial

Question 8

explain the double effect of competetive pressure

Answer 8

• pressure only good if the firms can compete by absorbing the leader’s knowledge/technology
• HSO only good if both firms at a similar technological level

Question 9

explain a possible value chain upgrade pathway

Answer 9

Downstream MNC assembler 1 provides upstream supplier 1 with training
-> Downstream assember 2 recieves (now better) components from Upstream SUpplier 1
-> HSO between downstream assemblers 1 &2
-> HSO between Upstream supplier 1 & 2