The OECD in collaboration with the European Commission is conducting a multi-year project to offer tailored policy advice to countries and regions on how to develop linkages between foreign direct investment (FDI) and local small and medium‑sized enterprises (SMEs), and how to strengthen FDI-SME ecosystems that can create more opportunities of productivity and innovation spillovers in heterogeneous contexts for local economic development and resilience.
Understanding FDI-SME spillovers: A conceptual framework
The pilot phase (2019-22) of the FDI-SME project aimed to better understand how FDI can affect the productivity and innovation capacity of local SMEs, and how governments can increase the potential of FDI spillovers, the absorptive capacity of SMEs and the efficiency of diffusion channels between the two.
The second phase (2022-24) will build on this pilot work to:
>> Download country studies flyer
Why a project on fostering FDI-SME ecosystems?
Achieving more resilient, sustainable and inclusive growth requires more productivity and innovation, as well as greater diffusion across regions to bridge inequalities and divides. Two drivers of performance could be strengthened: SMEs that make the economic fabric of many places, and FDI that contributes to the knowledge base and capital stock of the host places.
Boosting productivity and innovation requires fostering FDI‑SME ecosystems. International investment and domestic SMEs are interlinked. FDI can help SMEs increase productivity and innovation, through knowledge and technology spillovers. SMEs and their innovation capacities are an important determinant for FDI location.
Strengthening FDI-SME linkages and spillovers have become even more important in a post COVID‑19 recovery phase, as firms –small and large- and places look for competitiveness and resilience within domestic and global value chains.
Governments at national and sub‑national levels have a crucial role to play in creating the business and policy conditions for stronger FDI-SME linkages and spillovers. Public intervention can take place at the crossroad of investment promotion, innovation, SME and entrepreneurship, and regional development policies, and coordination across the board is key.
Effective policy intervention requires however a better understanding of how FDI can affect the productivity and innovation of local SMEs and which SMEs can attract quality FDI, as well as the conditions and policies that can enable greater spillovers and resilience.
PHASE 1January 2022: Launch of the review Strengthening FDI and SME linkages in Portugal
March 2023:- Launch of the report Strengthening FDI and SME Linkages in the Slovak Republic
- Launch of the report Policy Toolkit for Strengthening FDI and SME Linkages at the European Commission's Smart Specialisation Strategies (S3) Conference 2023 (Brussels, 30 March 2023)
Q3 2023 / Q1-4 2024: Series of three foresight workshops on the reconfiguration of global value chains and their impact on FDI-SMEs ecosystems.
Q1 2023 / Q1 2024: Czech Republic review.
Q2 2023 / Q3 2024: Poland review.
Q1-4 2024: New analytical report on the diversity of FDI-SME ecosystems and policy conditions.
The FDI-SME project is conducted in cooperation and with the support of the European Commission (EC)’s Directorate General for Regional and Urban Policy (DG REGIO).
It is developed jointly by the OECD Centre for Entrepreneurship, SMEs, Regions and Cities (CFE/EST) and the OECD Directorate for Financial and Enterprise Affairs (DAF/INV) under the aegis of the OECD Committee on SMEs and Entrepreneurship (CSMEE), and the OECD Investment Committee (IC). The project also benefits from consultation of the OECD Regional Development Policy Committee (RDPC).
The FDI-SME project contributes a building block of the OECD Data Lake on SMEs and Entrepreneurship and the monitoring infrastructure of the CSMEE.
If you are interested to learn more about the project or to get involved, please contact:
Lucia Cusmano: [email protected]
Martin Wermelinger: [email protected]