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). 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, Schleswig-Hosltein 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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