IDEAS home Printed from
   My bibliography  Save this article

Foreign direct investment and productivity spillovers in Irish manufacturing industry: evidence from plant level panel data


  • Frances Ruane
  • Ali Uğur


It is often argued that foreign firms may enhance the productivity of indigenous firms in an economy, through forward or backward linkages. Such externality effects typically are called "productivity spillovers". In terms of foreign direct investment (FDI), Ireland is one of the most globalized economies in the world, having pursued a strategy of promoting investment by foreign companies for over 40 years. This article examines possible productivity spillovers from foreign-owned firms to indigenous firms in the Irish manufacturing sector, using plant-level data on all manufacturing firms for the period 1991-1998. Despite Irish policy commitment to building linkages between foreign and domestic firms, we find only weak evidence of spillovers and this evidence is sensitive to the definition and measurement of foreign presence.

Suggested Citation

  • Frances Ruane & Ali Uğur, 2005. "Foreign direct investment and productivity spillovers in Irish manufacturing industry: evidence from plant level panel data," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 53-66.
  • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:1:p:53-66 DOI: 10.1080/1357151042000323139

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2007. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 482-496, August.
    2. Shleifer, Andrei & Vishny, Robert W., 1989. "Management entrenchment : The case of manager-specific investments," Journal of Financial Economics, Elsevier, vol. 25(1), pages 123-139, November.
    3. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    4. Morck, Randall & Shleifer, Andrei & Vishny, Robert W, 1990. " Do Managerial Objectives Drive Bad Acquisitions?," Journal of Finance, American Finance Association, vol. 45(1), pages 31-48, March.
    5. Blonigen, Bruce A. & Tomlin, KaSaundra, 2001. "Size and growth of Japanese plants in the United States," International Journal of Industrial Organization, Elsevier, vol. 19(6), pages 931-952, May.
    6. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
    7. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    8. Conyon, Martin J. & Girma, Sourafel & Thompson, Steve & Wright, Peter W., 2001. "Do hostile mergers destroy jobs?," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 427-440, August.
    9. Andrei Shleifer & Lawrence H. Summers, 1988. "Breach of Trust in Hostile Takeovers," NBER Chapters,in: Corporate Takeovers: Causes and Consequences, pages 33-68 National Bureau of Economic Research, Inc.
    10. Ravenscraft, David J & Scherer, F M, 1987. "Life after Takeover," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 147-156, December.
    11. Steven Globerman & John C. Ries & Ilan Vertinsky, 1994. "The Economic Performance of Foreign Affiliates in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 143-156, February.
    12. Conyon, Martin J, et al, 2002. "The Productivity and Wage Effects of Foreign Acquisition in the United Kingdom," Journal of Industrial Economics, Wiley Blackwell, vol. 50(1), pages 85-102, March.
    13. Sophia Dimelis & Helen Louri, 2002. "Foreign ownership and production efficiency: a quantile regression analysis," Oxford Economic Papers, Oxford University Press, vol. 54(3), pages 449-469, July.
    14. Rachel Griffith & Helen Simpson, 2004. "Characteristics of Foreign-Owned Firms in British Manufacturing," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 147-180 National Bureau of Economic Research, Inc.
    15. Alan J. Auerbach, 1988. "Corporate Takeovers: Causes and Consequences," NBER Books, National Bureau of Economic Research, Inc, number auer88-1, January.
    16. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
    17. Dennis Epple & Linda Argote & Kenneth Murphy, 1996. "An Empirical Investigation of the Microstructure of Knowledge Acquisition and Transfer Through Learning by Doing," Operations Research, INFORMS, vol. 44(1), pages 77-86, February.
    18. Florence Hubert & Nigel Pain, 2000. "Inward Investment and Technical Progress in the UK Manufacturing Sector," OECD Economics Department Working Papers 268, OECD Publishing.
    19. Dickerson, Andrew P & Gibson, Heather D & Tsakalotos, Euclid, 1997. "The Impact of Acquisitions on Company Performance: Evidence from a Large Panel of UK Firms," Oxford Economic Papers, Oxford University Press, vol. 49(3), pages 344-361, July.
    20. Frank R. Lichtenberg & Donald Siegel, 1987. "Productivity and Changes in Ownership of Manufactoring Plants," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3, Specia), pages 643-684.
    21. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    22. Girma, Sourafel & Görg, Holger, 2001. "Blessing or Curse? Domestic Plants' Survival and Employment Prospects After Foreign Acquisition," CEPR Discussion Papers 2994, C.E.P.R. Discussion Papers.
    23. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages 723-739, November.
    24. Jensen, Michael C, 1988. "Takeovers: Their Causes and Consequences," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 21-48, Winter.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ichiro Iwasaki & Péter Csizmadia & Miklós Illéssy & Csaba Makó & Miklós Szanyi, 2012. "The Nested Variable Model of FDI Spillover Effects: Estimation Using Hungarian Panel Data," International Economic Journal, Taylor & Francis Journals, vol. 26(4), pages 673-709, October.
    2. Y Wei & X Liu, 2006. "Productivity spillovers from R&D, exports and FDI in China's manufacturing sector," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 37(4), pages 544-557, July.
    3. Daniel Chudnovsky & Andres Lopez & Gaston Rossi, 2008. "Foreign Direct Investment Spillovers and the Absorptive Capabilities of Domestic Firms in the Argentine Manufacturing Sector (1992-2001)," Journal of Development Studies, Taylor & Francis Journals, vol. 44(5), pages 645-677.
    4. Girma, Sourafel & Görg, Holger & Strobl, Eric & Walsh, Frank, 2008. "Creating jobs through public subsidies: An empirical analysis," Labour Economics, Elsevier, vol. 15(6), pages 1179-1199, December.
    5. repec:eee:ecanpo:v:54:y:2017:i:c:p:15-25 is not listed on IDEAS
    6. Nicholas Crafts, 2014. "Ireland’s Medium-Term Growth Prospects: a Phoenix Rising?," The Economic and Social Review, Economic and Social Studies, vol. 45(1), pages 87-112.
    7. Pradeep Kumar Keshari, 2011. "Efficiency Spillovers from FDI in the Indian Machinery Industry: A Firm Level Study Using Panel Data Models," Working Papers id:4195, eSocialSciences.
    8. Dimitratos, Pavlos & Liouka, Ioanna & Young, Stephen, 2009. "Regional location of multinational corporation subsidiaries and economic development contribution: Evidence from the UK," Journal of World Business, Elsevier, vol. 44(2), pages 180-191, April.
    9. Huu Thanh Tam Nguyen & Nguyen Khac, 2013. "Demand creation and competition effect of Export-platform FDI on backward linkages - Evidence from panel data analysis of Vietnamese supporting industries," Documents de recherche 13-02, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    10. Schiffbauer, Marc & Siedschlag, Iulia & Ruane, Frances, 2009. "Do Foreign Mergers & Acquisitions Boost Firm Productivity?," Papers DYNREG47, Economic and Social Research Institute (ESRI).
    11. Kyuntae Kim & Hokyung Bang, 2008. "The Impact of Foreign Direct Investment on Economic Growth : A Case Study of Ireland," Development Economics Working Papers 22993, East Asian Bureau of Economic Research.
    12. Barbosa, Natália & Eiriz, Vasco, 2009. "Linking corporate productivity to foreign direct investment: An empirical assessment," International Business Review, Elsevier, vol. 18(1), pages 1-13, February.
    13. CUYVERS, Ludo & SOENG, Reth & PLASMANS, Joseph & VAN DEN BULCKE, Daniël, 2008. "Productivity spillovers from foreign direct investment in the Cambodian manufacturing sector: Evidence from establishment-level data," Working Papers 2008004, University of Antwerp, Faculty of Applied Economics.
    14. Frances Ruane & Ali U?ur, 2005. "Export Platform FDI and Dualistic Development," The Institute for International Integration Studies Discussion Paper Series iiisdp028, IIIS.
    15. Stefanescu, Răzvan & Dumitriu, Ramona, 2015. "Creşterea economică a României între 1980 şi 2013
      [The Economic Growth of Romania between 1980 and 2013]
      ," MPRA Paper 61592, University Library of Munich, Germany.

    More about this item


    Foreign Direct Investment; Irish Manufacturing; Productivity. JEL Classifications: F21; F23;

    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


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:12:y:2005:i:1:p:53-66. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.