What determines whether a country is better at using some technologies than others? A widely held view is that a country’s ability to absorb and implement technologies is tied to its human capital. In this paper, we construct a novel specification of technology that incorporates this idea....

The empirical literature finds mixed evidence on the existence of positive productivity externalities in the host country generated by foreign multinational companies. We propose a novel mechanism, which emphasizes the role of local financial markets in enabling foreign direct investment (FDI)...