There are theoretical reasons to expect that benefits to domestic firms from foreign direct investment would be confined to the area where the multinational firm is located and that the benefits depend on the development level of the host region. However, there is a scarcity of empirical studies...

Evidence on productivity spillovers from FDI to domestic firms is ambiguous. Incorrect estimation procedures may be one of the sources for the contradictory results obtained in empirical studies on this subject. We observe that inadequacy of the estimation procedures leads to a severe...