Kiel Working Papers, Kiel Institute for World Economics
No 1554:
Creating backward linkages from multinationals: Is there a role for financial incentives?
Holger Görg, Aoife Hanley and Eric Strobl
Abstract: We investigate whether government subsidies to local input
manufacturers encourage procurement from foreign firms. We use a
comprehensive panel data of Irish firms from 1983 until 2002. Our data
shows a spontaneity about linkages and relative insensitivity to grant aid,
although it may be the quality rather than quantity of linkages that
matters. The longevity of a foreign firm’s stay is one consistent driver of
linkages where foreign firms need time to find out about local suppliers.
Our results hold even when controlling for the possible joint determination
of grants and linkages and the boundedness of the linkage variable
Keywords: multinational enterprises, backward linkages, subsidies; (follow links to similar papers)
JEL-Codes: F23,; O14,; H25; (follow links to similar papers)
27 pages, September 2009
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