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The Spatial Dimension in FDI Spillovers: Evidence at the Regional Level from Portugal

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  • Nuno Crespo
  • Isabel Proença
  • Maria Paula Fontoura

Abstract

There are theoretical reasons to expect that benefits to domestic firms from foreign direct investment would be confined to the area where the multinational firm is located and that the benefits depend on the development level of the host region. However, there is a scarcity of empirical studies on FDI’s indirect effects at the regional level, particularly with regard to inter-industry spillovers. This paper is an empirical contribution to this literature with data for Portugal. Both intra-industry and inter-industry FDI spillovers are considered. The concept of region adopted comprises the county in which the domestic firm is located, together with all of the directly neighbouring counties. Equations are estimated using the System GMM, with robust estimation of covariance matrices. Data confirms the relevance of both the geographical proximity and the development level of the region to this phenomenon. Furthermore, FDI spillovers are more evident at the inter-industry level. These results raise important implications for economic policy.

Suggested Citation

  • Nuno Crespo & Isabel Proença & Maria Paula Fontoura, 2010. "The Spatial Dimension in FDI Spillovers: Evidence at the Regional Level from Portugal," Working Papers Department of Economics 2010/17, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
  • Handle: RePEc:ise:isegwp:wp172010
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    References listed on IDEAS

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    Cited by:

    1. Irina Melo & Alexandra Ferreira-Lopes, 2013. "Regional and Sectoral Foreign Direct Investment in Portugal since Joining the EU: A Dynamic Portrait," GEE Papers 0049, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Jul 2013.
    2. Simon Falck, 2016. "Foreign-to-domestic labour mobility in Sweden," Regional Science Policy & Practice, Wiley Blackwell, vol. 8(3), pages 111-125, August.

    More about this item

    Keywords

    Portugal; FDI intra-industry spillovers; FDI inter-industry spillovers; counties; regional development level; geographical proximity.;

    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

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