Productivity Spillovers, Regional Spillovers and the Role of by Multinational Enterprises in the New EU Member States

Marcella Nicolini and Laura Resmini

A chapter in Drivers of Innovation, Entrepreneurship and Regional Dynamics, 2011, pp 105-120 from Springer

Abstract: Abstract There is a widely held assumption that multinational enterprises (MNEs) generate benefits that spill over to the host economy, resulting in productivity growth. Several channels foster the diffusion of such spillovers. They include backward and forward linkages with local firms – through which multinational firms may encourage the entry and development of more efficient local suppliers and final goods producing firms (Markusen and Venables 1999), competition and demonstration effects (Wang and Blomstrom 1992; Glass and Saggi 2002), as well as movements of labour force from multinationals to local firms (Fosfuri et al. 2001). The transmission of spillovers from MNEs to domestic firms, however, is not automatic; rather, it is affected by several factors, most of which can be summarized in the concept of distance, broadly defined in order to encompass both the economic and the geographical dimension. Economic distance concerns relative backwardness and absorptive capacity and determines whether and to what extent local firms eventually benefit from Foreign Direct Investment (FDI)-induced spillovers (Findlay 1978; Glass and Saggi 1998).In this paper, Multinational Enterprises (MNEs) and Foreign Direct Investment (FDI) are used as synonymous.

Keywords: Foreign Direct Investment; Total Factor Productivity; Spatial Dependence; Foreign Firm; Manufacturing Sector (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1007/978-3-642-17940-2_6

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