Multinational Enterprises and Spillovers

  • Holger Görg
  • Alexander Hijzen


It has been estimated that the British government provided grants worth £50.75 million to Motorola to locate a production facility in Scotland in 1991, providing around 3000 jobs. Also, Siemens received around £50 million in order to attract it to build a plant employing 1000 workers in the North East of England in 1996.1 It seems reasonable to ask how such active policy can be justified. Apart from regional concerns in particular about direct job creation, the argument frequently centres around the possibility that foreign multinationals bring with them new technologies which may spill over to the local economy, benefiting not only the region but the economy as a whole. This argument has become particularly important given policy makers’ concerns that the United Kingdom is lagging behind its European and North American partners in terms of technology and productivity (e.g. DTI, 2001). Hence, an influx of foreign direct investment (FDI) associated with an inflow of new knowledge and technologies is seen as particularly advantageous.


Foreign Direct Investment Total Factor Productivity Absorptive Capacity Foreign Firm Domestic Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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© Holger Görg and Alexander Hijzen 2005

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  • Holger Görg
  • Alexander Hijzen

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