However, for economic growth in the long run, diffusion of technology and knowledge by MNCs to local firms may of greater of importance than the direct effects of FDI. The box summarizes the possible positive and negative growth effects of the different types of FDI. Motivated Expected by: growth effects: Vertical -resource (+) export FDI seeking revenues -) natural vertical FDI in resources primary -) labor sector: (-) little spillover effects from labor turnover (-) complex technology, little demonstration effects (-) little linkages with firms Horizontal -market (+) linkages FDI seeking with local -) expansion firms of market (+) spillover -) close to effects from foreign labor turnover customers (-) crowding out locale firms Efficiency (+ )introduce seeking local firms to FDI -host international country markets condition (+)knowledge and know how
However, for economic growth in the long run, diffusion of technology and knowledge by MNCs to local firms may of greater of importance than the direct effects of FDI. The box summarizes the possible positive and negative growth effects of the different types of FDI. Motivated by: Expected growth effects: Vertical FDI -resource seeking -) natural resources -) labor (+) export revenues vertical FDI in primary sector: (-) little spillover effects from labor turnover (-) complex technology, little demonstration effects (-) little linkages with firms Horizontal FDI -market seeking -) expansion of market -) close to foreign customers (+) linkages with local firms (+) spillover effects from labor turnover (-) crowding out locale firms FDI Efficiency seeking -host country condition (+ )introduce local firms to international markets (+)knowledge and know how
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