Productivity Spillovers to Domestic Plants from Foreign Direct Investment: Evidence from UK Manufacturing, 1974-1995
Empirical literature on the impact of FDI has considered at length the indirect spillover benefits that accrue to domestic plants as a result of FDI presence. However, the imprecise and disparate nature of spillovers makes accurate definition and indeed measurement of them difficult to achieve. In this paper, we consider the definition of what constitutes a spillover from FDI, and setout three main channels for spillovers; within (intra)industry, between (inter)industry and agglomeration. We then go on to measure the indirect impact of FDI on the total factor productivity of domestic plants in a number of UK manufacturing industries, 1974-1995, using a standard production function-based approach. We use data made available from the UK ARD and information derived from UK input-output tables, to establish the potential for inter-industry linkages. Our results indicate that the competition and ëabsorption capacityí effect at times outweighs any potential benefits, leading to negative spillovers. We also find that inter-industry spillovers are generally more prevalent than intra-industry spillovers. Generally, we do not find the agglomeration spillover to be significant. However, we conclude that the nature of spillovers is such that measurement techniques traditionally adopted fail to adequately explain their complex and diverse nature.
|Date of creation:||29 Aug 2002|
|Contact details of provider:|| Postal: Office of the Secretary-General, Rm E35, The Bute Building, Westburn Lane, St Andrews, KY16 9TS, UK|
Phone: +44 1334 462479
Web page: http://www.res.org.uk/society/annualconf.asp
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ecj:ac2002:96. 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: (Christopher F. Baum)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.