Are there regional spillovers from FDI in the Swiss manufacturing industry?

Lamia Ben Hamida

International Business Review, 2013, vol. 22, issue 4, 754-769

Abstract: This paper examines whether there are signs of regional spillovers from FDI, although evidence is still very scarce. It hypothesizes that (a) the assessment of regional spillovers relies on a detailed analysis of these effects, according to the channels by which they occur (namely, increasing competition, worker mobility, and demonstration effects); (b) the size and the extent of these effects depend on the interaction between their channels and the levels of existing technological capacity of local firms; and (c) spillover benefits tend to occur in regions where local firms largely invest in absorbing the best foreign knowledge. Using detailed firm-level manufacturing data from Switzerland, we have found that local firms gain from the presence of foreign firms in their region, but lose out if the firms are located elsewhere. Competition-related spillovers appear to be fully absorbed by local firms, with high technological capacities; worker-mobility-related spillovers are fully absorbed by low technology firms; while demonstration-related spillovers are absorbed by all groups of firms with mid technology firms experiencing the larger benefit. In addition, our results demonstrate that only local firms which have invested largely in the absorptive capacity benefit from spillovers, stemming mainly from technology transfer. This benefit seems to occur at both regional level and outside.

Keywords: Competition effects; Demonstration effects; FDI; Local absorptive capacity; Regional effect; Spillovers; Worker mobility (search for similar items in EconPapers)
JEL-codes: D21 D62 F21 F23 O33 R11 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:22:y:2013:i:4:p:754-769

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DOI: 10.1016/j.ibusrev.2012.08.004

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