Recent empirical research on externalities from foreign direct investment (FDI) is engaged with the identification of externalities along the dimensions of industry and geographical space. In this paper I explore these externality dimensions in the context of estimating FDI externalities in regional Mexican manufacturing industries. The main findings indicate that the presence of FDI creates a variety of externality effects. Intraregional foreign participation creates negative intraindustry and positive interindustry externalities. Furthermore, the estimations identify negative intraindustry externalities across regions and positive spatial interindustry FDI externalities. In addition, the estimations identify three different regional characteristics that have a negative or positive effect on spatial externalities from FDI.
Get full access to this article
View all access options for this article.
References
1.
AdseràA, 2000, “Sectoral spillovers and the price of land: a cost analysis”Regional Science and Urban Economics30565–585
2.
AitkenB JHarrisonA E, 1999, “Do domestic firms benefit from direct foreign investment? Evidence from Venezuela”The American Economic Review89605–618
3.
AitkenBHarrisonA ELipseyR E, 1996, “Wages and foreign ownership: a comparative study of Mexico, Venezuela and the United States”Journal of International Economics40345–371
4.
AitkenBHansonGHarrisonA E, 1997, “Spillovers, foreign investment and export behaviour”Journal of International Economics43385–406
5.
AnselinL, 1988Spatial Econometrics: Methods and Models (Kluwer, Dordrecht)
6.
AnselinLAcsZ JVargaA, 1997, “Local geographic spillovers between university research and high technology innovations”Journal of Urban Economics42422–448
7.
AudretschD BFeldmanM P, 2004, “Knowledge spillovers and the geography of innovation”, in Handbook of Urban and Regional EconomicsVolume 4 Eds HendersonV JThisseJ-F (North-Holland, Amsterdam) pp 2714–2739
8.
BlalockGGertlerP J, 2008, “Welfare gains from foreign direct investment through technology transfer to local suppliers”Journal of International Economics74402–421
9.
BlomströmM, 1989Foreign Investment and Spillovers (Routledge, London)
10.
BlomströmMKokkoA, 1998, “Multinational corporations and spillovers”Journal of Economic Surveys12(2) 1–31
11.
BlomströmMKokkoA, 2003, “The economics of foreign direct investment incentives”, WP 9489, National Bureau of Economic Research, Cambridge, MA
12.
BlomströmMWolffE, 1994, “Multinational corporations and productivity convergence in Mexico”, in Convergence of Productivity: Cross-national Studies and Historical Evidence Eds BaumolWNelsonRWolffE (Oxford University Press, Oxford) pp 263–284
13.
BlomströmMKokkoAZejanM, 2000Foreign Direct Investment; Firm and Host Country Strategies (Macmillan, Basingstoke, Hants)
14.
BodeE, 2004, “The spatial pattern of localised R&D spillovers: an empirical investigation for Germany”Journal of Economic Geography443–64
15.
CicconeAHallR E, 1996, “Productivity and the density of economic activity”The American Economic Review8654–70
16.
CombesP-P, 2000, “Economic structure and local growth: France, 1984–1993”Journal of Urban Economics47329–355
17.
CoryP F, 1981, “A technique for obtaining improved proxy estimates of minimum optimum statistics”The Review of Economics and Statistics6396–106
18.
CrespoNFontouraM P, 2007, “Determinant factors of FDI spillovers—what do we really know?”World Development35410–425
19.
De PropisLDriffieldN, 2006, “The importance of clusters for spillovers from foreign direct investment and technology sourcing”Cambridge Journal of Economics30277–291
20.
DriffieldN, 2006, “On the search for spillovers from FDI with spatial dependency”Regional Studies40107–119
21.
DriffieldNGirmaS, 2003, “Regional foreign direct investment and wage spillovers: plant-level evidence from the UK electronics industry”Oxford Bulletin of Economics and Statistics65453–474
22.
DriffieldNMundayMRobertsA, 2004, “Inward investment, transaction linkages and productivity spillovers”Papers in Regional Science83699–722
23.
DunningJ H, 1993Multinational Enterprises and the Global Economy (Addison-Wesley, Reading, MA)
24.
EbertsR WMcMillenD, 1999, “Agglomeration economies and public infrastructure”, in Handbook of Urban and Regional Economics, Volume 3 Eds CheshirePMillsE S (North-Holland, Amsterdam) pp 1455–1495
25.
GirmaSWakelinK, 2002, “Are there regional spillovers from FDI in the UK?”, in Trade, Investment, Migration and Labour Markets Eds GreenawayDUpwardRWakelinK (Macmillan, Basingstoke, Hants)
26.
GirmaSWakelinK, 2007, “Local productivity spillovers from foreign direct investment in the UK electronics industry”Regional Science and Urban Economics37399–412
27.
GlaeserE LKallalH DScheinkmanJ ASchleiferA, 1992, “Growth in cities”Journal of Political Economy1001126–1152
28.
GretherJ M, 1999, “Determinants of technology diffusion in Mexican manufacturing: a plant-level analysis”World Development271287–1298
29.
HaddadMHarrisonA, 1993, “Are there positive spillovers from foreign direct investment? Evidence from panel data for Morocco”Journal of Development Economics42(1) 51–74
30.
HansonG, 2001, “Should countries promote foreign direct investment?”, G-24 Discussion Paper Series, no. 9, Centre for International Development, Harvard University, Cambridge, MA
31.
HarrisR I DRobinsonC, 2002, “The impact of foreign acquisitions on total factor productivity: plant level estimates from UK manufacturing 1987–1992”Review of Economics and Statistics84562–568
32.
HaskelJ EPereiraS CSlaughterM J, 2002, “Does inward investment boost the productivity of domestic firms?”, WP w8724, National Bureau of Economic Research, Cambridge, MA
33.
HendersonV JKuncoroATurnerM, 1995, “Industrial development in cities”Journal of Political Economy1031067–1085
34.
JaffeA BTraitenbergM, 2002Patents, Citations and Innovations: A Window on the Knowledge Economy (MIT Press, Cambridge, MA)
35.
JaffeA BTraitenbergMHendersonR, 1993, “Geographic localisation of knowledge spillovers as evidenced by patent citations”Quarterly Journal of Economics63577–598
36.
JordaanJ A, 2005, “Determinants of FDI-induced externalities: new empirical evidence from Mexican manufacturing industries”World Development332103–2118
37.
JordaanJ A, 2008, “Intra- and inter-industry externalities from foreign-direct investment in the Mexican manufacturing sector: new evidence from Mexican regions”World Development forthcoming
38.
KokkoA, 1994, “Technology, market characteristics and spillovers”Journal of Development Economics43279–293
39.
LipseyR E, 2004, “Home- and host-country effects of foreign direct investment”, in Challenges to Globalisation Eds BaldwinR EWintersA L (University of Chicago Press, Chicago, IL) pp 333–379
40.
MartinR, 1999, “The new ‘geographical turn’ in economics: a critical reflection”Cambridge Journal of Economics2363–91
41.
MoomawR L, 1988, “Agglomeration economies: localisation or urbanisation?”Journal of Urban Studies25150–161
42.
ParrJ B, 2002, “Agglomeration economies: ambiguities and confusions”Environment and Planning A34717–731
43.
PerssonHBlomströmM, 1983, “Foreign investment and spillover efficiency in an underdeveloped economy: evidence from the Mexican manufacturing industry”World Development11493–501
44.
RamirezM D, 2000, “Foreign direct investment in Mexico: a cointegration analysis”The Journal of Development Studies12361–374
45.
RamirezM D, 2006, “Is foreign direct investment beneficial for Mexico? An empirical analysis, 1960–2001”World Development34802–817
46.
RigbyD LEssletzbichlerJ, 1997, “Evolution, process variety and regional trajectories of technological change in US manufacturing”Economic Geography73269–284
47.
RigbyD LEssletzbichlerJ, 2000, “Impacts of industry mix, technological change, selection and plant entry/exit on regional productivity growth”Regional Studies34333–342
48.
RodrikD, 1992, “Closing the productivity gap: does trade liberalization really help?”, in Trade Policy, Industrialization and Development: New Perspectives Ed. HelleinerG (Clarendon, Oxford) pp 155–175
49.
RosenthalSStrangeW, 2004, “Evidence on the nature and sources of agglomeration economies”, Handbook of Urban and Regional Economics, volume 4 Eds HendersonV JThisseJ-F (North-Holland, Amsterdam) pp 2119–2171
50.
SmarzynskaB K, 2004, “Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages”The American Economic Review94605–627
