Wednesday, February 20

Bringing Foreign Experts into the country helps in knowledge transfers!

Sounds like a good thing to me. But this will need to be looked in conjuction with the freedom of labour to move across boundaries. If an expert can move from USA to Bangladesh to talk about food rotation and offer his abilities, then can a farm labourer move from Bangladesh to USA to offer his food rotation abilities?

Gains from productivity and knowledge transmission arising from the presence of foreign firms have received a good deal of empirical attention, but theoretical micro-foundations for this mechanism are limited. Here we develop a model in which foreign experts may train domestic workers who work with them. Hypotheses are generated under the assumptions that workers learn from experts (the effect of using an expert is not strictly temporary) and that this learning is embodied in the workers rather than in the firm. We use fixed effects and nearest neighbour matching estimators on a panel of plant-level data for Colombia that identifies the use of foreign experts, to show that these experts have substantial and persistent positive effects (though not always immediate) on the wages of domestic workers and on the value added per worker.

All this to be taken with a grain of piquant salt!!!

No comments: