Silva Neira, I., Rodríguez, C., & Pédussel Wu, J. (2025). Institute for International Political Economy, Berlin. Working Paper No. 252/2025
This paper investigates the microeconomic impacts of foreign direct investment (FDI) on local innovation using firm-level data from Chile. Applying a structural CDM model, the authors evaluate how foreign ownership and sectoral FDI flows affect innovation outcomes. Their findings suggest that while foreign competition may increase R&D expenditure, it can also reduce the likelihood of innovation in domestic firms—especially in highly competitive sectors. The study offers new empirical evidence for policymakers seeking to balance FDI attraction with strategies to strengthen local innovation capacity. Read More