A spatial approach to the FDI-growth nexus in Spain: Dealing with the headquarters effect

Paula Gutiérrez-Portilla, Adolfo Maza and José Villaverde

International Business Review, 2019, vol. 28, issue 6, -

Abstract: This paper examines the effects of inward FDI on economic growth across the Spanish regions over the period 1996–2013, paying particular attention to the ‘headquarters effect’, namely that FDI is not always registered where it is effectively made but in the region in which the firm’s headquarters is located. By estimating a panel Spatial Durbin Model to allow for the detection of spatial spillovers, two main findings are reported. First, FDI does foster economic growth. Second, only when the headquarters effect is properly addressed do spatial spillovers arise. Hence, this effect is masking the impact of regional FDI spillovers on growth, which affects the reliability of the results and, consequently, FDI policies choice. Importantly, the results are: a) robust to the way of computing the headquarters effect; b) independent of the spatial weight matrix specification; and c) confirmed when splitting FDI into different industrial and service branches.

Keywords: Foreign direct investment; Growth; Headquarters effect; Spatial dependence; Spanish regions (search for similar items in EconPapers)
JEL-codes: C23 F21 O11 R12 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:iburev:v:28:y:2019:i:6:7

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DOI: 10.1016/j.ibusrev.2019.101597

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