An investigation into construction-related foreign direct investment and technology spillovers

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Technology Spillovers are externalities of Foreign Direct Investment (FDI) where firms mostly multinationals investing in a particular country uses certain technologies and management practices which are inadvertently transferred to the local firms without any formal transaction or agreement taking place. This research investigated Technology Spillovers from FDI within the construction industry in Ghana. Scholarly works on Technology Spillovers from FDI have thus focused on the manufacturing industry whiles studies into the construction industry which is major contributed to GDP in Ghana in the industrial sector has been scanty. Through the critical review of extant literature, the study identified the channels of Technology Spillovers, potential barriers as well as enabling. Secondary data on FDI over the last decade within the construction industry was obtained from GIPC and analysed using exploratory data analysis. The result of the analysis shows fluctuating trends of FDI, an average of 30 FDI over the last decade majority of which are in the real estate subsector and a wholly foreign-owned dominated industry. The implication of these findings is that there is less joint ownership of firms in FDI relationship hence less TT agreement. Survey-based questionnaires were distributed to 130 construction professionals with at least ten (10) years’ working experience and are in senior management position. Out of the 130 professionals reached, 75 responded with the completed questionnaires representing 56.69% and were used for the analysis. The mean score and the relative importance index were used to analyse the field data. The results of the analysis revealed that the best channel of Technology Spillovers applicable to the construction Industry is through Demonstration where local firms imitate new technologies through learning by doing, ahead of the Competition, Labour Mobility, and Forward Linkages channels. Nine (9) severe barriers were identified with low absorption capacity of the domestic firms due to lack of internal research and development (R&D) by the domestic firms, inadequate policies and regulations, high capacity gap and the organisation culture of the domestic firms as the most severe barriers. The results identified ten (10) critical success factors with top management strategic decision, unique standards and regulatory framework, capacity building and benchmarking as the most critical. The results of Man-Whitney U and the Kruskal-Wallis H inferential tests revealed that there is generally no statistical significance differences in the responses of professionals in relation to their background information. The findings are expected to enhance policy decision on Foreign Direct Investment and Technology Spillovers, provide new ways to deal with competition from foreign firms and a platform for further research into specific FDI projects.
A thesis submitted to the Department of Building Technology, College of Art and Built Environment in partial fulfilment of the requirements for the degree of Master of Philosophy.