Are there Regional Spillovers from FDI in the UK?

Sourafel Girma and Katharine Wakelin
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Katharine Wakelin: University of Nottingham

Chapter 10 in Trade, Investment, Migration and Labour Market Adjustment, 2002, pp 172-186 from Palgrave Macmillan

Abstract: Abstract One of the aims of attracting FDI to the UK through incentives is to improve regional development. Having firms locate in depressed regions, or regions with relatively low activity, will provide a direct impact in terms of employment and capital creation — assuming there were under-utilised resources prior to entry and a potential indirect effect via spillovers to local firms. A recent example of such intervention is the aid package given to Siemens to locate in the North East of England, an underdeveloped region with Assisted Area status. State investment included a $30 million grant which, along with other benefits, totalled $76 million (UNCTAD (1996)). The assumption behind such packages is that the long-term economic impact on the region will exceed the cost of the subsidies. We aim to examine whether spillovers from foreign to domestic firms occur at the level of the region. We look at whether domestic firms gain from foreign firms only if they locate in the same region, or whether all firms in a sector gain regardless of location.

Keywords: Foreign Direct Investment; Total Factor Productivity; Absorptive Capacity; Domestic Firm; Intangible Asset (search for similar items in EconPapers)
Date: 2002
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DOI: 10.1057/9781403920188_10

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