Regional policy and spillovers from FDI in the UK

Driffield, Nigel Regional policy and spillovers from FDI in the UK. Annals of Regional Science, 38 (4), pp. 579-594.

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.

Publication DOI: https://doi.org/10.1007/s00168-003-0174-5
Divisions: Aston Business School > Economics finance & entrepreneurship
Aston Business School > Economics finance & entrepreneurship research group
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Additional Information: The original publication is available at springerlink.com
Uncontrolled Keywords: regional policy makers,internationally mobile capital,public money,subsidies,grants,social returns,private returns,spillovers,inward investors,domestic industry

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