ABSTRACT
With the rapid expansion of multinational enterprises (MNEs) and foreign direct investment (FDI) in the global economy, the effect of FDI on the host economy has become of great interest and has remained a contentious issue. The impacts include, for example, productivity, employment, capital accumulation, competition effects, etc. Traditional studies on FDI impacts suggest that FDI has positive effects on productivity not merely because it is a source of capital accumulation but also because it is an important source of human capital augmentation, technological change and various spillovers of ideas across countries through MNEs (Grossman and Helpman, 1995).
