While popular opinion often pictures FDI flowing in search of lowest-wage, lowest-skilled activities in emerging markets, actual FDI to such countries increasingly addresses medium to high-skilled manufacturing sectors. Such FDI might be called 'Quality FDI' that contributes to the creation of...

This paper focuses on the role of the efficiency gap in determining whether or not domestic firms benefit from productivity spillovers from FDI. We use establishment level data for the period 1980–1992 for the UK. Given that there is substantial heterogeneity of productivity across...