Title:
Thinking locally: A subsidiary centred model of FDI-related spillovers
Thinking locally: A subsidiary centred model of FDI-related spillovers
Author(s)
Marín, Anabel
Advisor(s)
Editor(s)
Collections
Supplementary to
Permanent Link
Abstract
Governments in developing (and developed) countries spend large sums to attract foreign
companies (e.g. $300,000 per job created in Brazil). But there is only one welfare
justification for subsidizing MNCs: that they generate spillover effects. Yet, most of the
empirical literature has not identified the expected spillovers or explained why they do not appear to occur (Smeets, 2008, Jarovick, 2004). I argue that this is because of a
mismatch between the key assumptions underlying the conventional model used to
estimate spillover effects and recent theorizing about how MNCs operate. Then, I
propose an alternative approach. In this alternative the accumulation of technological
assets and capacities by MNC’s subsidiaries in the host economy, is the main driver of
spillover effects in association with FDI. This contrasts with conventional approaches
which presume that spillovers arise exclusively in association with technological assets
created by MNC's in central locations. The paper sumarises the empirical evidence in
support of the alternative model proposed here and outlines some of the key theoretical
and policy implications of this new way of conceptualizing spill over effects.
Sponsor
Date Issued
2008-09
Extent
Resource Type
Text
Resource Subtype
Proceedings