The importance of clusters for spillovers from foreign direct investment and technology sourcing

Lisa De Propris, Nigel Driffield*

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

This paper examines the link between cluster development and inward foreign direct investment. The conventional policy approach has been to assume that inward foreign direct investment (FDI) can stimulate significant clustering activity, thus generating significant spillovers. This paper, however, questions this and shows that, while clusters can generate significant productivity spillovers from FDI, this only occurs in pre-existing clusters. Further, the paper demonstrates that foreign-owned firms that enter clusters also appropriate spillovers when domestic firms undertake investment, raising the possibility that clusters are important locations for so called technology, or knowledge sourcing activities by MNEs. © 2006 Oxford University Press.

Original languageEnglish
Pages (from-to)277-291
Number of pages15
JournalCambridge Journal of Economics
Volume30
Issue number2
Early online date9 Aug 2005
DOIs
Publication statusPublished - 1 Mar 2006

Bibliographical note

© The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

Keywords

  • Cluster
  • Foreign direct investment
  • Productivity spillovers

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