GEP Research Paper 04/11
Foreign Direct Investment and Local Economic Development: Beyond Productivity Spillovers
Holger Görg and Eric Strobl
This paper is forthcoming in Blomström, M., E. Graham and T. Moran (eds): The Impact of Foreign Direct Investment on Development: New Measurements, New Outcomes, New Policy Approaches, Institute for International Economics, Washington DC, 2004.
Abstract
We investigate how multinational companies can foster economic development of the host country at the micro level. Traditionally the empirical literature measuring spillovers to the host economy arising from foreign direct investment has focused on productivity spillovers, i.e., technological externalities. In this paper we emphasise that pecuniary externalities from multinationals can also be important. These can affect plant start-up and post-entry performance in terms of survival and growth. We substantiate this by outlining and discussing previous and providing new empirical results using a comprehensive plant level panel data set for the Republic of Ireland.
Issued in May 2004.
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