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FDI Spillovers at Regional Level: Evidence from Portugal

  • Nuno Crespo

    (ISCTE - Department of Economics and UNIDE-ERC)

  • Isabel Proença

    (ISEG-UTL and CEMAPRE)

  • Maria Paula Fontoura

    (ISEG-UTL)

This paper aims to establish whether geographical proximity between multinational and domestic firms is relevant to the occurrence of FDI spillovers, by considering both horizontal and vertical spillovers. Using data for Portugal, this hypothesis is confirmed. In the case of horizontal externalities, the impact is negative, probably due to the competition effect. Concerning vertical externalities, a positive impact through backward linkages is observed. Additionally, omission of the regional dimension provokes a bias on the estimation of the intra-sectoral effect at the national level. These results raise important implications for the economic policies aiming to attract FDI and promote regional development.

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File URL: http://bru-unide.iscte.pt/RePEc/pdfs/ERCwp0508.pdf
File Function: First version, 2008
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Paper provided by ISCTE-IUL, Business Research Unit (BRU-IUL) in its series Working Papers Series 1 with number ercwp0508.

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Length: 35 pages
Date of creation: 15 Jun 2008
Date of revision:
Handle: RePEc:isc:iscwp1:ercwp0508
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