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Firms’ internationalization, Innovation, Knowledge flows, F20, O14, O31,

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The absorptive capacity represents the ability of enterprises to efficiently absorb and internalise knowledge from outside: it represents the link between firms' capabilities to implement new products and the external stock of technological opportunities, such as those spilled-out from Multinational Enterprises (MNEs). In this framework, the present paper aims at testing the absorptive capacity of Italian firms arising from inward Foreign Direct Investment (FDI). Given the peculiar characteristics of the Italian productive system, our analysis will focus on three different dimensions: technology gap between foreign and local enterprises, domestic firm size, and geographical distribution of firms. Our findings suggest that technological gap and firm size matter considerably for the spillover effect. Moreover, spillovers exhibit a subnational dimension, being present only in North-East region of the Peninsula. Terms of use: Documents in JEL: L33, F23, O17Keywords: absorptive capacity; MNEs, FDI spillovers; technology gap; firm size; regionality.

This paper investigates the impact of incoming foreign direct investment on local wages in the Italian manufacturing sector. We find that wage spillovers take place mainly when the technological gap between domestically owned firms and foreign‐owned firms is large. Specifically, a large technological distance between domestically owned and foreign‐owned firms has positive effects on wages paid by domestically owned firms in the same industry and negative on domestic wages in upstream and/or in downstream industries. Finally, inward investment may indeed improve the domestic sectors, although such linkage depends on different characteristics of domestically owned firms and sectors where firms operate.