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Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?

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Author Info
Görg, Holger () (GEP, University of Nottingham, DIW Berlin and IZA Bonn)
Greenaway, David (GEP, University of Nottingham)

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Abstract

Governments the world over offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits to augment the primary benefits of a boost to national income from new investment. This paper begins by reviewing possible sources of FDI induced spillovers. It then provides a comprehensive evaluation of the empirical evidence on productivity, wages and exports spillovers in developing, developed and transitional economies. Although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is, at best, mixed. The reasons for this are explored and the paper concludes with a review of policy aspects.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 944.

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Length: 38 pages
Date of creation: Nov 2003
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Handle: RePEc:iza:izadps:dp944

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Related research
Keywords: foreign direct investment; multinationals; spillovers; productivity; wages; exports;

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Find related papers by JEL classification:
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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