EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: A substantial literature has grown up around the issue of how inward direct investment affects host countries. On almost every aspect of this question, there seems to be a wide range of empirical results in academic literature, and little sign of convergence. It is our purpose here to try to understand why contradictory results seem to be found by different investigators. Is it that the statistical techniques are different? Or are the countries they examine different? Or are they asking different questions under the same labels of wages, productivity, or spillovers? We try to answer these questions in two ways. One is to review the individual studies themselves to clarify the questions asked and the data used. The other is to survey studies on data for Indonesia, which cover a long period and are detailed and accessible, to test the implications of different definitions and methods.

Keywords: FDI; Wages; Productivity; Spillovers

JEL-codes: F23; J31; O12

34 pages, May 17, 2004

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