Exporting, Linkages and Productivity Spillovers from Foreign Direct Investment

Abstract

In this paper we analyze productivity spillovers from foreign direct investment using firm-level panel data for U.K. manufacturing industries from 1992-1999. 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, and from different types of inward investment.