This paper uses firm level dat to examine how technology spillover through FDI affect the productivity of domestic firm in Korea. We advance the understanding as to when, where and under what condition FDI generate technology spillovers domestic firm. We find that domestic firms gain technology spillover through vertical linkage with foreign firms, but the effect of the horizontal presence of foreign firms on the productivity of domestic firms is negative. This suggests that potential technology transfer between foreign firms and their local competitors is more than offset by the competition induced by the entry of foreign firms. The existence and strength of horizontal and vertical spillover depend on industry and firm characteristics and on the types of FDI. This paper distiinguishes between horizontal spillovers and vertical spillovers, and examines the impact of characteristics of country and of domestic firms on the strength of horizontal and vertical spillover and on the types of FDI. In particular, the technology gap between MNCs and domestics firms, ownership structure, firm size, trade orientation, and absorptive capacity of local firms are considered in searching the different effect of spillovers. We adress the issues of whether the characteristics of foreign investor affect the existience and magnitude of technology spillovers by looking at the types of foreign ownership and trade orientation of foreign firms

This paper uses firm level dat to examine how technology spillover through FDI affect the productivity of domestic firm in Korea. We advance the understanding as to when, where and under what condition FDI generate technology spillovers domestic firm. We find that domestic firms gain technology spillover through vertical linkage with foreign firms, but the effect of the horizontal presence of foreign firms on the productivity of domestic firms is negative. This suggests that potential technology transfer between foreign firms and their local competitors is more than offset by the competition induced by the entry of foreign firms. The existence and strength of horizontal and vertical spillover depend on industry and firm characteristics and on the types of FDI. This paper distiinguishes between horizontal spillovers and vertical spillovers, and examines the impact of characteristics of country and of domestic firms on the strength of horizontal and vertical spillover and on the types of FDI. In particular, the technology gap between MNCs and domestics firms, ownership structure, firm size, trade orientation, and absorptive capacity of local firms are considered in searching the different effect of spillovers. We adress the issues of whether the characteristics of foreign investor affect the existience and magnitude of technology spillovers by looking at the types of foreign ownership and trade orientation of foreign firms