Must-Read: Albert Hirschman's forward and backward linkages, perhaps better formulated as the creation of engineering communities of technological practice, as a big benefit of FDI. That is, of the right kind of FDI--if you can get it:
: Foreign Entry and Domestic Innovation: "Multinationals are more productive than domestic firms...
...[but] the evidence on productivity spillovers remains mixed. This column estimates the effects of foreign presence on the innovation of local firms... suggests that spillovers from foreign firms to domestic firms are limited to domestic firms immediately connected to foreign firms. Requirements for foreign firms to have significant local content may therefore be justified...
http://www.voxeu.org/article/foreign-entry-and-domestic-innovation
