Productivity spillovers and regional differences: some evidence on the italian manufacturing sector

This work examines the main theoretical and empirical interpretations regarding the effects of foreign direct investment on productivity of local firms and, in particular, in which way productivity spillovers are related to the existence of regional differences. By taking into consideration the Italian manufacturing sector and using cross-section data, we find that 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.