1.10. RENTS, TFP & FDI: intensiveness and technological know-how or simple economies of scale? The case of Chile.

Autores: Greve, F., Villena, M.

 

Palabras Clave: Foreign  Direct  Investment,  Total  Factor  Productivity,  Rent-Seeking,  Technological Spillovers, Know-How, Economies of Scale.

 

This paper attempts to answer the question of where they come from the high rents from foreign firms. Is this because they have economies of scale that are boosting the TFP, increased productivity or increased technological intensiveness? The estimation results and statistical analysis show that the activity in which firms are embedded with FDI is mostly capital intensive (size), therefore there are largely derived their incomes.

That is, the mark-up on sales in enterprises comes, first, of the total factor productivity, and the effect of FDI is negative. Considering that the TFP comes from economies of scale or technological intensiveness, should bear these results when evaluated in terms of technological spillovers, the effect of FDI activity in the economy. That is, considering that more than generating technological spillovers, FDI is a flow of money that allows projects to capitalize on a lower price to that in local markets. And, based on the above, maybe rethink the subsidy policy on foreign investment.