Foreign direct investmant, spillovers and absorptive capacity: Evidence from quantile regressions

Sourafel Girma and Holger Görg

The Institute for International Integration Studies Discussion Paper Series from IIIS

Abstract: This paper focuses on the role of absorptive capacity in determining whether or notdomestic firms benefit from productivity spillovers from FDI using establishment level data for the UK. We distinguish the effect of FDI in the same sector and region from FDI in the same sector but outside the region. We also allow for different effects of FDI on establishments located at different quantiles of the productivity distribution by using conditional quantile regression. Overall, while there is substantial heterogeneity in results across sectors and quantiles, our findings clearly suggest that both absorptive capacity and distance matter for productivity spillover benefits. We find evidence for a u-shaped relationship between absorptive capacity and productivity spillovers from FDI in the region, while there is an inverted u-shaped relationship for spillovers from FDI outside the region. We also analyse in some detail the impact of changes in absorptive capacity on establishments’ ability to benefit from spillovers.

Keywords: foreign direct investment; absorptive capacity; productivity spillovers; quantile regressions (search for similar items in EconPapers)
Pages: 36 pages
Date: 2003-07-01
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Foreign direct investment, spillovers and absorptive capacity: evidence from quantile regressions (2005)
Working Paper: Foreign direct investment, spillovers and absorptive capacity: Evidence from quantile regressions (2005)
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