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

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  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

  • Greenaway, David

    ()
    (University of Nottingham)

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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Bibliographic Info

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
Date of revision:
Publication status: published in: World Bank Research Observer, 2004, 19(2), 171-197
Handle: RePEc:iza:izadps:dp944

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

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