Creating backward linkages from multinationals: Is there a role for financial incentives?

Holger Görg (), Aoife Hanley and Eric Albert Strobl ()

Kiel Working Papers from Kiel Institute for the World Economy

Abstract: We investigate whether government subsidies to local input manufacturers encourage procurement from foreign firms. We use a comprehensive panel data of Irish firms from 1983 until 2002. Our data shows a spontaneity about linkages and relative insensitivity to grant aid, although it may be the quality rather than quantity of linkages that matters. The longevity of a foreign firm’s stay is one consistent driver of linkages where foreign firms need time to find out about local suppliers. Our results hold even when controlling for the possible joint determination of grants and linkages and the boundedness of the linkage variable

Keywords: multinational enterprises; backward linkages; subsidies (search for similar items in EconPapers)
JEL-codes: F23 O14 H25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pke
Date: 2009-09
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Persistent link: http://EconPapers.repec.org/RePEc:kie:kieliw:1554

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