DP6383 Exporting, Linkages and Productivity Spillovers from Foreign Direct Investment

Author(s): Sourafel Girma , Holger Görg , Mauro Pisu

Publication Date: July 2007

Keyword(s): absorptive capacity , exporting , foreign direct investment , linkages , productivity spillovers

JEL(s): F1 , F2

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP6383.asp.asp

In this paper we analyse productivity spillovers from foreign direct investment using firm level panel data UK manufacturing industries from 1992 to 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.