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Regional policy and spillovers from FDI in the UK

Author

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  • Nigel Driffield

Abstract

This paper tests one of the fundamental assumptions of regional policy makers over the last 20 years. Western governments, in seeking to attract internationally mobile capital have spent significant sums of public money on subsidies and grants. This is justified on the basis that the social returns to FDI are significantly greater than the private returns, due to productivity or technology spillovers from inward investors to domestic industry. However, this paper generates some estimates of these spillovers for both assisted areas and non-assisted areas in the UK, and questions the size of these social returns, arguing that productivity spillovers do not occur in regions where significant inward investment incentives are available. Copyright Springer-Verlag 2004

Suggested Citation

  • Nigel Driffield, 2004. "Regional policy and spillovers from FDI in the UK," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(4), pages 579-594, December.
    • Handle: RePEc:spr:anresc:v:38:y:2004:i:4:p:579-594
    DOI: 10.1007/s00168-003-0174-5
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    Cited by:

    1. Roberto Antonietti & Raffaello Bronzini & Giulio Cainelli, 2015. "Inward greenfield FDI and innovation," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 93-116, March.
    2. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    3. Simon Falck, 2016. "Foreign-to-domestic labour mobility in Sweden," Regional Science Policy & Practice, Wiley Blackwell, vol. 8(3), pages 111-125, August.
    4. Yuandi Wang & Lutao Ning & Jian Li & Martha Prevezer, 2016. "Foreign Direct Investment Spillovers and the Geography of Innovation in Chinese Regions: The Role of Regional Industrial Specialization and Diversity," Regional Studies, Taylor & Francis Journals, vol. 50(5), pages 805-822, May.
    5. Nick Clifton & Robyn Keast & David Pickernell & Martyn Senior, 2010. "Network Structure, Knowledge Governance, and Firm Performance: Evidence from Innovation Networks and SMEs in the UK," Growth and Change, Wiley Blackwell, vol. 41(3), pages 337-373, September.
    6. Yuyuan Wen, 2014. "The spillover effect of FDI and its impact on productivity in high economic output regions: A comparative analysis of the Yangtze River Delta and the Pearl River Delta, China," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 341-365, June.
    7. Nuno Crespo & Maria Paula Fontoura & Isabel Proença, 2009. "FDI spillovers at regional level: Evidence from Portugal," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 591-607, August.
    8. Khalid Al Khathlan, 2014. "Foreign Direct Investment Inflows and Economic Growth in Saudi Arabia: A Co-integration Analysis," Review of Economics & Finance, Better Advances Press, Canada, vol. 4, pages 70-80, Feburary.
    9. Klaus E Meyer & Evis Sinani, 2009. "When and where does foreign direct investment generate positive spillovers? A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1075-1094, September.
    10. Richard Harris, 2009. "Spillover and Backward Linkage Effects of FDI: Empirical Evidence for the UK," SERC Discussion Papers 0016, Centre for Economic Performance, LSE.
    11. Miao Wang & M. C. Sunny Wong, 2016. "Effects of Foreign Direct Investment on Firm-level Technical Efficiency: Stochastic Frontier Model Evidence from Chinese Manufacturing Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(3), pages 335-361, September.
    12. Hamida, Lamia Ben, 2013. "Are there regional spillovers from FDI in the Swiss manufacturing industry?," International Business Review, Elsevier, vol. 22(4), pages 754-769.
    13. Santos, Eleonora, 2017. "Externalities from FDI on domestic firms’ Productivity: A Literature Review for Developed Countries," MPRA Paper 88958, University Library of Munich, Germany.
    14. Piers Thompson & Wenyu Zang, 2022. "A matter of life and death? Knowledge intensity of FDI activities and domestic enterprise," Papers in Regional Science, Wiley Blackwell, vol. 101(5), pages 1157-1179, October.
    15. Jacob Jordaan & Eduardo Rodriguez-Oreggia, 2012. "Regional growth in Mexico under trade liberalisation: how important are agglomeration and FDI?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 179-202, February.
    16. Ning, Lutao & Wang, Fan & Li, Jian, 2016. "Urban innovation, regional externalities of foreign direct investment and industrial agglomeration: Evidence from Chinese cities," Research Policy, Elsevier, vol. 45(4), pages 830-843.

    More about this item

    Keywords

    O33; R58;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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