Foreign Direct Investment, Spillovers and Absorptive Capacity: Evidence from Quantile Regressions

40 Pages Posted: 8 Jun 2016

See all articles by Sourafel Girma

Sourafel Girma

Nottingham University Business School

Holger Görg

University of Kiel

Multiple version iconThere are 2 versions of this paper

Date Written: 2005

Abstract

This paper focuses on the role of absorptive capacity in determining whether or not domestic firms benefit from productivity spillovers from FDI using establishment level data for the UK. We allow for different effects of FDI on establishments located at different quantiles of the productivity distribution by using conditional quantile regression. Overall, while there is some heterogeneity in results across sectors and quantiles, our findings clearly suggest that absorptive capacity matters for productivity spillover benefits. We find evidence for a u-shaped relationship between productivity growth and FDI interacted with absorptive capacity. We also analyse in some detail the impact of changes in absorptive capacity on establishments' ability to benefit from spillovers.

Keywords: foreign direct investment, absorptive capacity, productivity spillovers, quantile regressions

JEL Classification: F23, F21

Suggested Citation

Girma, Sourafel and Görg, Holger, Foreign Direct Investment, Spillovers and Absorptive Capacity: Evidence from Quantile Regressions (2005). Bundesbank Series 1 Discussion Paper No. 2005,13. Available at SSRN: https://ssrn.com/abstract=2785099

Sourafel Girma (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Nottingham, NG8 1BB
United Kingdom
+44 0 115 8466656 (Phone)

HOME PAGE: http://www.nottingham.ac.uk/~lizsmg/

Holger Görg

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

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