Industrial Linkages and Export Spillovers from FDI

30 Pages Posted: 20 Jan 2007

See all articles by Richard Kneller

Richard Kneller

University of Nottingham

Mauro Pisu

Leverhulme Centre for Research on Globalisation and Economic Policy; National Bank of Belgium; OECD

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In this paper we investigated the hypothesis of export spillovers from foreign multinationals to domestic firms using a data set of UK manufacturing firms from 1992 to 1999. Unlike previous studies we allow not only for the possibility of horizontal (i.e. intra-industry) and regional externalities, but also for vertical ones (i.e. inter-industry: forward and backward). Deploying the Heckman selection process we modelled the two decisions of whether to export or not, and how much to export, separately. The results indicate that the decision to start exporting is positively associated with the presence of foreign firms in the same industry and region; furthermore, export-oriented foreign affiliates seem to be the source of stronger export spillovers. The decision concerning how much to export is affected positively by foreign firms in downstream industries and by those in the same industry and region that do not export.

Suggested Citation

Kneller, Richard and Pisu, Mauro, Industrial Linkages and Export Spillovers from FDI. The World Economy, Vol. 30, No. 1, pp. 105-134, January 2007, Available at SSRN: or

Richard Kneller (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
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Mauro Pisu

Leverhulme Centre for Research on Globalisation and Economic Policy ( email )

University of Nottingham
School of Economics
Nottingham, NG7 2RD
United Kingdom

National Bank of Belgium ( email )

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Brussels, 1000

OECD ( email )

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