Jonathan E. Haskel () (Queen Mary, University of London) Sonia C. Pereira (University College London) Matthew J. Slaughter (Dartmouth College and NBER)
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Are there productivity spillovers from FDI to domestic firms, and, if so, how much should host countries be willing to pay to attract FDI? To examine these questions we use a plant-level panel covering U.K. manufacturing from 1973 through 1992. Across a wide range of specifications, we estimate a significantly positive correlation between a domestic plant's TFP and the foreign-affiliate share of activity in that plant's industry. This is consistent with positive FDI spillovers. We do not generally find significant effects on plant TFP of the foreign-affiliate share of activity in that plant's region. Typical estimates suggest that a 10 percentage-point increase in foreign presence in a U.K. industry raises the TFP of that industry's domestic plants by about 0.5 percent. We also use these estimates to calculate the per-job value of these spillovers. These calculated values appear to be less than per-job incentives governments have granted in recent high-profile cases, in some cases several times less.
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Paper provided by Queen Mary, University of London, Department of Economics in its series Working Papers with number
452.
Find related papers by JEL classification: F2 - International Economics - - International Factor Movements and International Business L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Black, Dan A & Hoyt, William H, 1989.
"Bidding for Firms,"
American Economic Review,
American Economic Association, vol. 79(5), pages 1249-56, December.
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