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Multinational Corporations and Spillovers

  • Blomström, Magnus

    ()

    (Department of Economics)

  • Kokko, Ari

    ()

    (Department of Economics)

This paper examines spillover effects of the activities of multinational firms. Such effects are most likely to be found in host countries, where the operations of foreign multinationals may influence local firms in the MNCs own industry as well as firms in other industries. However, there is no comprehensive evidence on the exact nature or magnitude of these effects, although it is suggested that host country spillovers vary systematically between countries and industries. In particular, the positive effects of foreign investment are likely to increase with the level of local capability and competition. The spillovers to the home countries of MNCs are often more difficult to identify, for various reasons. Earlier studies suggest that the effects are generally positive, but the increasing international division of labor within multinationals complicates the analysis. The impact on the home country is likely to depend on what activities these firms concentrate at home.

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Paper provided by Stockholm School of Economics in its series SSE/EFI Working Paper Series in Economics and Finance with number 99.

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Length: 49 pages
Date of creation: Feb 1996
Date of revision:
Publication status: Published in Journal of Economic Surveys, 1998, pages 247-277.
Handle: RePEc:hhs:hastef:0099
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