and exporting to a pole.

Capital flows, particularly FDI, may also be an important channel of technological diffusion. Theoretically, multinational parents may transfer technological knowledge to their subsidiaries (Ethier 1986; Markusen 2004). Knowledge may spill over from subsidiaries to other firms in the host country through labor turnover (Fosfuri, Motta & Rønde 2001). Multinationals can also provide subsidiaries with technology embodied in intermediate goods and services (Rodr ́ıguez-Clare 1996). However, there is only weak empirical evidence that FDI is, more broadly, an important channel of technological diffusion, and the evidence that FDI facilitates large intraindustry spillovers is also decidedly mixed. Large intraindustry spillovers are found primarily in some case studies of high-technology FDI projects (for example in the case of microchip-maker Intel in Costa Rica, as studied by Larra ́ın, L ́opez-Calva & Rodr ́ıguez-Clare (2001)) and studies of samples of firms drawn from relatively high-technology sectors (as in the case of Keller & Yeaple (2009) for U.S. manufacturing). Firm-level studies using broader samples have typically found evidence of only small intraindustry spillovers (Griffith, Redding & Simpson 2004; Haskel, Pereira & Slaughter 2007). There is also some evidence of vertical spillovers, which tend to be somewhat stronger. For example, Javorcik (2004) finds evidence of technological spillovers from FDI through backward linkages in firm-level Lithuanian data, from partly foreign owned firms to their domestic suppliers, but not from fully foreign-owned firms; while AlAzzawi (2011) finds a strong positive effect of both inward and outward FDI when a multinational corporation establishes a foreign subsidiary.

Overall, it appears that technology diffusion is facilitated by some forms of FDI, and by FDI in high-technology sectors. FDI may also promote growth through other channels than technology diffusion, such as reallocation of production to relatively productive sectors, and to relatively productive firms within sectors. More broadly, financial openness in general can promote growth, especially when such liberalization is combined with complementary institutional reform, which spurs domestic financial market development and fosters growth<sup>4</sup> (Beck & Levine 2005; Quinn & Toyoda 2008). Thus, capital flows may indeed be an important channel through which poles drive global growth.

It is likely that technological knowledge is generally difficult or impossible to codify fully, so that some technological knowledge remains tacit and can only be passed on from person to person (David 1993; Polanyi 1958). Theory has long suggested that labor mobility can promote knowledge spillovers (Arrow 1962), including between countries. Empirical evidence supports the hypothesis that both migration and short-term business travel facilitate diffusion of tacit technological knowledge. For example, Oettl & Agrawal (2008) find that international labor mobility not only promotes knowledge flows to the firms who hire immigrants, but also knowledge spillovers to other firms in the economy. Kim, Lee & Marschke (2009) study US firms access to non-U.S. R&D output by employing workers with foreign research experience, and find evidence that this is a significant channel for the diffusion of knowledge to the U.S.

> 4For a recent survey article on financial liberalization and growth, see Obstfeld (2009)

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