Foreign direct investment and productivity spillovers: the case of the Spanish automobile industry

Abstract

The aim of this paper is to analyze empirically the impact that foreign direct investment (FDI) inflows has on the labour productivity of the Spanish automobile sector. To do that, we take also into account that this effect may vary depending on the ability of the industry to learn new technologies. Concretely, using industrial data for the period 1994-2013, we estimate the causal relationship between FDI, domestic research and development expenditure and productivity in the automobile industries. Our results suggest that FDI flows received by the Spanish automobile sector have a beneficial influence on productivity. However, it was not possible to find any causal link between domestic R&D and productivity.