The Spatial Dimension in FDI Spillovers: Evidence at the Regional Level from Portugal

Nuno Crespo (), Isabel Proença () and Maria Paula Fontoura

No 2010/17, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: There are theoretical reasons to expect that benefits to domestic firms from foreign direct investment would be confined to the area where the multinational firm is located and that the benefits depend on the development level of the host region. However, there is a scarcity of empirical studies on FDI’s indirect effects at the regional level, particularly with regard to inter-industry spillovers. This paper is an empirical contribution to this literature with data for Portugal. Both intra-industry and inter-industry FDI spillovers are considered. The concept of region adopted comprises the county in which the domestic firm is located, together with all of the directly neighbouring counties. Equations are estimated using the System GMM, with robust estimation of covariance matrices. Data confirms the relevance of both the geographical proximity and the development level of the region to this phenomenon. Furthermore, FDI spillovers are more evident at the inter-industry level. These results raise important implications for economic policy.

Keywords: Portugal; FDI intra-industry spillovers; FDI inter-industry spillovers; counties; regional development level; geographical proximity. (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2010-10
New Economics Papers: this item is included in nep-cse, nep-geo, nep-int and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: The Spatial Dimension in FDI Spillovers: Evidence at the Regional Level from Portugal (2012)
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