The Technology and Knowledge Spillover Effects of FDI on Labour Productivity

Abstract

Objective – The purpose of this study is to investigate both “technology” and “knowledge” effects of foreign direct investment (FDI) on labour productivity in the medium-high manufacturing industries’ classification in Malaysia. Methodology/Technique –This study employs a Seemingly Unrelated Regression (SUR) estimator. Findings – The results conclude that diffusion of knowledge, which increases labour productivity, is greater via “learning effects” as compared to the investor countries’ capital investments in the medium-high manufacturing industries. Novelty –This study expands the body of knowledge about the benefits of FDI spillovers on labour productivity according to specific investor countries, however, are rarely researched particularly in developing countries and at the industry level. Type of Paper: Empirical. JEL Classification: E60, J24 Keywords: Foreign Direct Investment; Labour Productivity; Technology Spillovers; Knowledge Spillovers Reference to this paper should be made as follows: Yunus,N.M; Wahob, N.A. (2021). The Technology and Knowledge Spillover Effects of FDI on Labour Productivity, Journal of Business and Economics Review, 5(4) 51–58. https://doi.org/10.35609/jber.2021.5.4(5)