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

Governments the world over offer significant inducements to attract investment, motivated by the expectation of spillover benefits to augment the primary benefits of a boost to national income from new investment. There are several possible sources of induced spillovers from foreign direct investmen...

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Bibliographic Details
Published in:The World Bank research observer 2004-09, Vol.19 (2), p.171-197
Main Authors: Görg, Holger, Greenaway, David
Format: Article
Language:English
Subjects:
Competition
Econometrics
Economic benefits
Economic competition
Economic policy
Economic theory
Empirical evidence
Enterprises
Exports
Finance
Foreign direct investment
Foreign direct investments
Foreign investment
Globalization
Government
Host country
Human capital
Industrial productivity
International economics
Multinational corporations
Observational research
Productivity
Spillovers
Studies
Technology adoption
Technology transfer
Transition economies
Wages
Wages & salaries
World Bank
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Summary:Governments the world over offer significant inducements to attract investment, motivated by the expectation of spillover benefits to augment the primary benefits of a boost to national income from new investment. There are several possible sources of induced spillovers from foreign direct investment. This article evaluates the empirical evidence on productivity, wage, and export spillovers in developing, developed, and transition economies. Although theory can identify a range of possible spillover channels, robust empirical support for positive spillovers is at best mixed. The article explores the reasons and concludes with a review of policy aspects.
ISSN:0257-3032
1564-6971
1564-6971
DOI:10.1093/wbro/lkh019