Empirical evidence about FDI spillovers to domestic firms has provided mixed results. This global evaluation has recently been complemented with the analysis of the factors that determine the existence, dimension and sign of FDI spillovers. We survey the arguments that support these factors and analyze the empirical evidence already produced. FDI spillovers depend on many factors, frequently with an indeterminate effect. Absorptive capacity of domestic firms and regions are a precondition for incorporating the benefits of FDI spillovers. Concerning the remaining factors, the results suggest opposite effects or, in some cases, are still insufficient to legitimate decisive conclusions.

This paper aims to establish whether geographical proximity between multinational and domestic firms is relevant to the occurrence of FDI spillovers, by considering both horizontal and vertical spillovers. Using data for Portugal, this hypothesis is confirmed. In the case of horizontal externalities, the impact is negative, probably due to the competition effect. Concerning vertical externalities, a positive impact through backward linkages is observed. Additionally, omission of the regional dimension provokes a bias on the estimation of the intra-sectoral effect at the national level. These results raise important implications for the economic policies aiming to attract FDI and promote regional development. Copyright (c) 2009 the author(s). Journal compilation (c) 2009 RSAI.

Intra-industry trade, product differentiation, unit values, comparative advantage, Portugal,

The central and eastern European countries (CEECs) have gone through a dramatic process of industrial restructuring in which the Europe Agreements have played a major role. Using detailed statistics, we analyse the transformation of CEECs' export structures and whether it led to structural convergence with the remaining EU members. We also analyse structural transformation within sectors in terms of quality ranges. The results show that, in general terms, CEECs have converged both at inter- and intra-sectoral levels towards pre-existing European Union (EU) members. We discuss whether further restructuring and relocation of CEECs' industrial patterns are probable in the aftermath of EU membership. Copyright (c) 2007 The Author(s); Journal compilation (c) 2007 Blackwell Publishing Ltd.

In this paper, we make use of recent data published by the World Input‐Output Database to: (i) provide evidence on trade in value added of the major Organization for Economic Co‐operation and Development (OECD) member countries and major emerging economies (designated by OE country group), namely by measuring the degree of participation in global value chains (GVCs) at the country and sectoral levels; and (ii) estimate whether the GVC participation of OE countries has positively influenced foreign direct investment (FDI) inward stocks in the 2000s. The pooled regression model estimated shows that the country′s degree of GVC participation has contributed positively for bilateral FDI inward stocks, after controlling for other possible FDI determinants.

This paper investigates the impact of foreign direct investment (FDI) on the productivity of Portuguese manufacturing sectors. It improves on previous studies by considering the choice of the most appropriate interval of the technological gap for spillovers diffusion. Sectoral variation in the coefficients of the spillover effect is also allowed for. Idiosyncratic factors are identified by means of a fixed effects panel model and positive inter-sectoral spillovers are also examined. Significant spillovers require a proper technological differential between foreign and domestic producers and favourable sectoral characteristics. They may occur in modern industries in which the foreign firms have a clear, but not too sharp, edge on the domestic ones. Agglomeration effects are also a pertinent specific influence. Ce texte examine les r�percussions des investissements directs �trangers (IDE) sur la productivit� des secteurs manufacturiers au Portugal. La sp�cification du mod�le est am�lior�e par le choix de l'intervalle le plus appropri� de l'�cart technologique pour la diffusion des spillovers. Nous tenons �galement compte des variations sectorielles dans les coefficients de spillovers; des facteurs sectoriels idiosyncrasiques sont identifi�s au moyen d'un mod�le � effets fixes. Les spillovers intersectoriels positifs sont examin�s. Des spillovers importants requi�rent un v�ritable �cart technologique entre producteurs �trangers et domestiques ainsi que des caract�ristiques sectorielles favorables. Ils peuvent se produire dans les industries modernes o� les entreprises �trang�res jouissent d'une sup�riorit� nette, mais pas trop marqu�e. Les effets d'agglom�ration exercent aussi une influence sp�cifique pertinente.

European Union, Gravity model, Poisson Pseudo-Maximum Likelihood estimator, Trade potential, Confidence intervals, Delta method, F14, F15, F17,

The main focus of the present paper is on the emerging and likely future trade effects of enlargement. Though our particular concern is with Portugal, we set the scene by comparing the trade structures of the 10 countries of Central and Eastern Europe (i.e. the eight CEE accession states plus Bulgaria and Romania) – including an analysis of the individual cases of the Czech Republic, Hungary and Poland – with those of the EU15 as a whole, and with those of the 4 EU cohesion countries. The elimination of trade barriers between incumbents and accession states will have two trade‐related effects on EU incumbents: an increase in bilateral flows with the CEEC and a shift effect as the CEEC displace some incumbent exports to EU markets. The first effect is likely to be strongest for those incumbents for which there is a strong overlap between their export structure and the import structure of the CEEC. Portugal emerges as one of the economies with the least overlap. The displacement effect, we conclude, is likely to be particularly strong in the case of Portugal, given the high degree of similarity between Portuguese exports and those of the CEEC. Portugal appears to be ‘being squeezed from below’ in that, for the majority of its traditional export sectors, the CEEC became progressively more competitive during the second half of the 1990's. Portuguese specialisation was increasingly confined to low‐technology, low‐added‐value sectors with declining demand, as strong FDI inflows to the CEEC led to an increasing preponderance of more dynamic sectors in their export structures. Thus, Portugal is also being squeezed from above. This suggests that there may be substantial industrial disruption, in response to which labour‐market flexibility and dynamic entrepreneurial response is crucial. Intersectoral mobility is generally easier the more highly educated the workforce – an indicator on which Portugal scores poorly. The Portuguese labour market, however, displays a high degree of flexibility, consistent with its long lasting low rate of unemployment. Continued flexibility will help minimise these likely adjustment costs. Besides the trade and industry effects, other topics considered in the paper include the implications of enlargement for Portugal's ability to attract FDI, the likely consequences for Portugal of inward migration from the CEEC to the EU, and the implications of enlargement for Portugal's budgetary relations with the rest of the EU.