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Creating Backward Linkages from Multinationals: Is there a Role for Financial Incentives?

Holger Görg, Aoife Hanley and Eric Strobl ()

Chapter 14 in Multinational Enterprises and Host Country Development, 2016, pp 261-275 from World Scientific Publishing Co. Pte. Ltd.

Abstract: We investigate whether government subsidies encourage foreign multinationals to create linkages with domestic suppliers. To this end we usc a unique panel dataset of foreign multinationals located in Ireland for which we have exhaustive information on grant receipt. Our results indicate that while European and US foreign plants develop backward linkages independently of grant receipt, multinationals from other parts of the world respond positively to government support. Our results hold even when controUing for the possible endogeneity of grants and the boundedness of the linkage variable. We conclude that governments should not apply a “one-size-fits-all” approach to incentivizing foreign multinationals.

Keywords: Multinational Enterprises; Foreign Direct Investment; Spillovers; Development; Host Country (search for similar items in EconPapers)
JEL-codes: F6 F0 O1 (search for similar items in EconPapers)
Date: 2016
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Related works:
Journal Article: Creating Backward Linkages from Multinationals: Is there a Role for Financial Incentives? (2011)
Working Paper: Creating backward linkages from multinationals: is there a role for financial incentives? (2009) Downloads
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