Institutional proximity and the size and geography of foreign direct investment spillovers: Do European firms generate more favourable productivity spillovers in the European Union neighbourhood?

Vassilis Monastiriotis ()

Environment and Planning C, 2016, vol. 34, issue 4, 676-697

Abstract: The European Union (EU) association framework provides European businesses with an entry advantage into the associated countries by facilitating production links and encouraging institutional convergence. It is believed that this has multiple beneficial effects for the associated countries, including ones related to productivity spillovers accruing to domestic firms. However, no empirical evidence exists to show that the presence of European firms produces larger productivity spillovers in recipient economies compared to firms from other world regions. We examine this question using firm-level data covering 28 transition countries over the period 2002–2009. We estimate the intra-industry productivity effects of foreign ownership and examine how these differ across regional blocks (Central and Eastern Europe, South East Europe and European Neighbourhood Policy), by origin of investor (EU15 versus non-EU15), across geographical scales (national versus regional) and for different types of locations (capital-city regions versus the rest). Our results suggest that investments of EU origin play a distinctive role, helping raise domestic productivity in the associated countries unlike investments from outside the EU. However, this process operates in a spatially selective manner, potentially enhancing regional disparities and spatial imbalances. This assigns a particular responsibility for EU policy to devise interventions that will help redress these problems within its existing association framework.

Keywords: European Union neighbourhood; foreign direct investment spillovers; institutional proximity; regional disparities (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0263774X16645105 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:envirc:v:34:y:2016:i:4:p:676-697

DOI: 10.1177/0263774X16645105

Access Statistics for this article

More articles in Environment and Planning C
Bibliographic data for series maintained by SAGE Publications ().