The Role of Exporting and Linkages for Productivity Spillovers from FDI

Abstract:     
In this paper we analyse productivity spillovers from foreign direct investment using firm level panel data UK manufacturing industries from 1992 to 1999. We investigate spillovers through horizontal, backward and forward linkages, distinguish spillovers from export oriented vs domestic market oriented FDI, and allow for differing effects depending on domestic firms' export activities. The results suggest that the mechanisms through which spillovers affect domestic firms are very complex and that there are substantial differences in spillover benefits for domestic exporters and non-exporters.

Number of Pages in PDF File: 32

Keywords: Foreign Direct Investment, productivity spillovers, exporting, absorptive capacity, competition

JEL Classification: F23

working papers series