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A spatial approach to the FDI-growth nexus in Spain: Dealing with the headquarters effect

Published on Dec 1, 2019in International Business Review3.64
· DOI :10.1016/j.ibusrev.2019.101597
Paula Gutiérrez-Portilla1
Estimated H-index: 1
(UC: University of Cantabria),
Adolfo Maza15
Estimated H-index: 15
(UC: University of Cantabria),
José Villaverde Castro16
Estimated H-index: 16
(UC: University of Cantabria)
Abstract
Abstract This paper examines the effects of inward FDI on economic growth across the Spanish regions over the period 1996–2013, paying particular attention to the ‘headquarters effect’, namely that FDI is not always registered where it is effectively made but in the region in which the firm’s headquarters is located. By estimating a panel Spatial Durbin Model to allow for the detection of spatial spillovers, two main findings are reported. First, FDI does foster economic growth. Second, only when the headquarters effect is properly addressed do spatial spillovers arise. Hence, this effect is masking the impact of regional FDI spillovers on growth, which affects the reliability of the results and, consequently, FDI policies choice. Importantly, the results are: a) robust to the way of computing the headquarters effect; b) independent of the spatial weight matrix specification; and c) confirmed when splitting FDI into different industrial and service branches.
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#1Paula Gutiérrez-Portilla (UC: University of Cantabria)H-Index: 1
#2Adolfo Maza (UC: University of Cantabria)H-Index: 15
Last.José Villaverde Castro (UC: University of Cantabria)H-Index: 16
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