Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?

38 Pages Posted: 16 Dec 2003

See all articles by Holger Görg

Holger Görg

University of Kiel; Kiel Institute for the World Economy

David Greenaway

University of Nottingham - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2003

Abstract

Governments the world over offer significant inducements to attract inward investment, motivated by the expectation of spillover benefits to augment the primary benefits of a boost to national income from new investment. This paper begins by reviewing possible sources of FDI induced spillovers. It then provides a comprehensive evaluation of the empirical evidence on productivity, wages and exports spillovers in developing, developed and transitional economies. Although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is, at best, mixed. The reasons for this are explored and the paper concludes with a review of policy aspects.

Keywords: foreign direct investment, multinationals, spillovers, productivity, wages, exports

JEL Classification: F21, F23

Suggested Citation

Gorg, Holger and Greenaway, David, Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment? (November 2003). IZA Discussion Paper No. 944. Available at SSRN: https://ssrn.com/abstract=475044

Holger Gorg (Contact Author)

University of Kiel ( email )

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

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

David Greenaway

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5469 (Phone)
+44 115 951 4159 (Fax)

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