Technology Spillovers from Foreign Direct Investment on Green Innovations

It is widely acknowledged that foreign direct investment (FDI) is associated with new technologies and managerial know-how which could affect positively the performance of local firms via knowledge and technology spillovers. There are several channels through which such spillovers can take place including enhanced competition, learning effects, as well as supply chain linkages. While most of existing studies have focused on productivity spillovers, these spillover channels could also affect the green innovation performance of indigenous firms.

This research project examines whether and the extent to which there are technological spillovers from foreign affiliates on the green innovations of local firms in Ireland. Specifically, this research addresses three inter-related research questions:

(1) Is there a foreign-ownership green innovation premium?

(2) Are there horizontal technological spillovers from foreign-owned firms to the Irish-owned firms’ green innovations? Specifically, two types of horizontal spillovers are examined:

·        Intra-industry spillovers – associated with the presence of foreign-owned firms in the same industry 

·        Intra-region spillovers associated with the presence of foreign-owned firms in the same region  

(3) Are there vertical technological spillovers via supply chain linkages from foreign-owned firms to the introduction of green innovations by Irish-owned firms? 

This research project is part of the Research Programme on Environmental Socio-Economics 2024-2026 funded by the Environmental Protection Agency. The research results will provide evidence that could foster green innovations in the domestic sector and the transition to a circular economy.