Inward investment, transaction linkages and productivity spillovers

Abstract

The paper examines the extent to which foreign manufacturing firms in the UK promote productivity growth in the domestically-owned manufacturing sector through their buying and supplying relationships. The paper reveals evidence for intra-and inter-regional externalities from the presence of foreign manufacturing, and intra-and inter-industry effects. Externalities in the domestic sector are most noticeable where foreign manufacturing sells to domestic manufacturing. These externalities are, however, not wholly robust to different specifications of spatial dependence. The findings are positioned in a debate which has tended to view backward (as opposed to forward) linkages from multinationals to domestically-owned supply bases as a critical driver of indirect economic benefits.

Knowledge Spillovers from FDI: A Critical Review from the International Business Perspective

“…In general, since several spillover channels have a relevant spatial element, co‐location is an important spillover facilitator (Driffield et al . ; Girma and Wakelin ; Grether ), especially in the presence of significant levels of local industry specialization (Menghinello et al . ).…”

Transnational Corporations, Global Production Networks, and Urban and Regional Development: A Geographer's Perspective onMultinational Enterprises and the Global Economy

“…3 3 A separate but distinct strand of literature in regional studies has focused on the impact of foreign direct investment (FDI) on regional development (e.g., Driffield and Hughes 2003; Driffield, Munday, and Roberts 2004; Gripaios, Gripaios, and Munday 1997; Hill and Munday 1994; Munday, Morris, and Wilkinson 1995; Turok 1993, 1997). Nevertheless, this literature has not paid much attention to the complex interaction between TNC organization, particularly in the form of global production networks (GPNs), and regional development.…”

Does FDI enhance provincial productivity? A panel data analysis in Vietnam

“…The second channel for FDI spillovers is based on industrial linkages between indigenous firms and FIEs. Specifically, these are backward linkages that force indigenous suppliers to improve their productivity, in order to meet the demand of the more efficient FIEs (Blomström & Sjöholm, 1999;Driffield et al, 2004). In some cases, FIEs may voluntarily offer technical support to their indigenous suppliers as part of total quality management practice.…”