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The domestic productivity effects of FDI in Greece: loca(lisa)tion matters!

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  • Jacob A. Jordaan
  • Vassilis Monastiriotis

Abstract

Despite an extensive empirical literature on the factors conditioning the size and prevalence of FDI productivity spillovers, the geographical dimension of these externalities remains relatively under-explored. In this paper we use firm level data from the Greek manufacturing sector to identify how three features of economic geography – spatial heterogeneity (location), spatial proximity (localisation) and spatial concentration (agglomeration) – influence the size and sign of FDI spillovers within and across industries. We find that FDI spillovers predominantly materialise at the sub-national level, with horizontal spillovers being more prominent at the regional scale (NUTS2) and vertical spillovers being highly localised (at the NUTS3 level). Furthermore, we find important synergies between spillovers from FDI and industry-region specific agglomeration. Also, FDI spillovers are found to be conditional on regional characteristics related to each region’s manufacturing base, FDI concentration, urban agglomeration and aggregate productivity. These results highlight the important role played by geography for the materialisation of productivity spillovers accruing from FDI and suggest that these key geographical features (location, localisation and agglomeration) ought to be taken into account both in the study of FDI spillovers and in the design of FDI-promotion and regional development policies.

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  • Jacob A. Jordaan & Vassilis Monastiriotis, 2016. "The domestic productivity effects of FDI in Greece: loca(lisa)tion matters!," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 105, Hellenic Observatory, LSE.
  • Handle: RePEc:hel:greese:105
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    1. John Hatgioannides & Marika Karanassou & Hector Sala & Menelaos Karanasos & Panagiotis Koutroumpis, 2017. "The Legacy of a Fractured Eurozone: the Greek Dra(ch)ma," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 115, Hellenic Observatory, LSE.
    2. Kougias, Konstantinos, 2017. "‘Real’ flexicurity worlds in action: evidence from Denmark and Greece," LSE Research Online Documents on Economics 69576, London School of Economics and Political Science, LSE Library.
    3. Konstantinos Kougias, 2017. "‘Real’ Flexicurity Worlds in action: Evidence from Denmark and Greece," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 106, Hellenic Observatory, LSE.

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