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The importance of clusters for spillovers from foreign direct investment and technology sourcing

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  • Lisa De Propris
  • Nigel Driffield

Abstract

This paper examines the link between cluster development and inward foreign direct investment. The conventional policy approach has been to assume that inward foreign direct investment (FDI) can stimulate significant clustering activity, thus generating significant spillovers. This paper, however, questions this and shows that, while clusters can generate significant productivity spillovers from FDI, this only occurs in pre-existing clusters. Further, the paper demonstrates that foreign-owned firms that enter clusters also appropriate spillovers when domestic firms undertake investment, raising the possibility that clusters are important locations for so called technology, or knowledge sourcing activities by MNEs. Copyright 2006, Oxford University Press.

Suggested Citation

  • Lisa De Propris & Nigel Driffield, 2006. "The importance of clusters for spillovers from foreign direct investment and technology sourcing," Cambridge Journal of Economics, Oxford University Press, vol. 30(2), pages 277-291, March.
  • Handle: RePEc:oup:cambje:v:30:y:2006:i:2:p:277-291
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    File URL: http://hdl.handle.net/10.1093/cje/bei059
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    Cited by:

    1. Richard Harris, 2011. "Models Of Regional Growth: Past, Present And Future," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 913-951, December.
    2. Didenko Alexander & Egorova Tatiana, 2014. "Innovations as factor of absorptive capacity of fdi spillovers across regions of Russian Federation," Review of Business and Economics Studies, CyberLeninka;Федеральное государственное образовательное бюджетное учреждение высшего профессионального образования «Финансовый университет при Правительстве Российской Федерации» (Финансовый университет), issue 3, pages 75-85.
    3. Riccardo Crescenzi & Carlo Pietrobelli & Roberta Rabellotti, 2016. "Regional strategic assets and the location strategies of emerging countries’ multinationals in Europe," European Planning Studies, Taylor & Francis Journals, vol. 24(4), pages 645-667, April.
    4. Santos, Eleonora, 2017. "Externalities from FDI on domestic firms’ Productivity: A Literature Review for Developed Countries," MPRA Paper 88958, University Library of Munich, Germany.
    5. Toan Thang TRAN & Thi Song Hanh PHAM, 2013. "Spatial Spillovers of Foreign Direct Investment: The Case of Vietnam," Working Papers 12, Development and Policies Research Center (DEPOCEN), Vietnam.
    6. Pami Dua & B. N. GOLDAR & SMRUTI RANJAN BEHERA, 2011. "Foreign Direct Investment And Technology Spillover-- An Evaluation Across Different Clusters In India," Working papers 200, Centre for Development Economics, Delhi School of Economics.
    7. David Edgington & Roger Hayter, 2013. "The In Situ Upgrading of Japanese Electronics Firms in Malaysian Industrial Clusters," Economic Geography, Clark University, vol. 89(3), pages 227-259, July.
    8. Belussi , Fiorenza, 2015. "The international resilience of Italian industrial districts/clusters (ID/C) between knowledge re-shoring and manufacturing off (near)-shoring," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 32, pages 89-113.
    9. Harris, Richard, 2009. "Spillover and backward linkage effects of FDI: empirical evidence for the UK," LSE Research Online Documents on Economics 33206, London School of Economics and Political Science, LSE Library.
    10. repec:taf:jdevst:v:52:y:2016:i:10:p:1431-1445 is not listed on IDEAS
    11. Tsu-Lung Chou & Jung-Ying Chang & Te-Chuan Li, 2014. "Government Support, FDI Clustering and Semiconductor Sustainability in China: Case Studies of Shanghai, Suzhou and Wuxi in the Yangtze Delta," Sustainability, MDPI, Open Access Journal, vol. 6(9), pages 1-27, August.
    12. repec:eee:respol:v:47:y:2018:i:2:p:474-486 is not listed on IDEAS
    13. Lucas Figal Garone & Alessandro Maffioli & Joao Negri & Cesar Rodriguez & Gonzalo Vázquez-Baré, 2015. "Cluster development policy, SME’s performance, and spillovers: evidence from Brazil," Small Business Economics, Springer, vol. 44(4), pages 925-948, April.
    14. Cesare Imbriani & Piergiuseppe Morone & Rosanna Pittiglio & Filippo Reganati, 2012. "Agglomeration economies, local cluster and foreign direct investments a pilot study for Emilia Romagna region," Economics Bulletin, AccessEcon, vol. 32(1), pages 662-674.
    15. Aleksandar Kostadinov, 2008. "Assessment Of Foreign Direct Investments In Western Balkan Countries, The Case Of Macedonia," Journal Articles, Center For Economic Analyses, pages 33-39, June.
    16. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
    17. Elif Bascavusoglu-Moreau & Qian Cher Li, 2013. "Knowledge Spillovers & Sources of Knowledge in the Manufacturing Sector: Literature Review & Empirical Evidence for the UK," Working Papers wp451, Centre for Business Research, University of Cambridge.
    18. repec:spr:rvmgts:v:12:y:2018:i:2:d:10.1007_s11846-017-0268-6 is not listed on IDEAS
    19. repec:wfo:wstudy:58911 is not listed on IDEAS
    20. Marek Jemala, 2009. "Strategic Business Alliances: Qualitative Analysis of Specific Factors of Business Clusters," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2009(4), pages 19-33.
    21. Saurav Pathak & Emanuel Xavier-Oliveira & André O. Laplume, 2016. "Technology use and availability in entrepreneurship: informal economy as moderator of institutions in emerging economies," The Journal of Technology Transfer, Springer, vol. 41(3), pages 506-529, June.
    22. Camilla Jensen & Marcin winiarczyk, 2014. "Special Economic Zones - 20 years later," CASE Network Studies and Analyses 0467, CASE-Center for Social and Economic Research.
    23. Gabor Bekes, 2015. "Measuring regional competitiveness: A survey of approaches, measurement and data," IEHAS Discussion Papers 1529, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    24. Vassilis MONASTIRIOTIS & Jacob A. JORDAAN, 2010. "Does FDI promote regional development? Evidence from local and regional productivity spillovers in Greece," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 1, pages 139-164, December.

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