The Effects of Foreign Direct Investment on Local Firms: Some Evidence from Panel Data for the Italian Manufacturing Sector

Are productivity spillovers from FDI related to the existence of regional differences ? Using panel data, we find that in the Italian manufacturing sector, although at a national level productivity levels are higher in the domestic sectors where multinational firms account for larger shares, productivity spillovers are concentrated only in the North-Western area of Italy. This shows firstly, the existence of a geographic component in the spillovers from FDI; secondly, the peculiarity of the Italian manufacturing structure where different models of production, such as the “network enterprise model” in the North-west, the “industrial district model” in the North-east and the “backward model” in the South, live together. Thirdly, this preliminary result confirms those obtained in our previous works where cross-sectional data at industry level were used.