Greenfield foreign direct investments and regional environmental technologies

This paper builds on (eco-)innovation geography and international business studies to investigate the effects of greenfield foreign direct investments (FDIs) on regional specialisation in environmental technologies. Combining the OECD-REGPAT and the fDi Markets datasets with respect to 1,050 European NUTS3 regions over the 2003-2014 period, we find that FDIs can positively impact regions' specialisation in green technologies. This effect is statistically significant when FDIs occur in industries where environmental patents represent a relatively high share of total inventive activities (green-tech FDIs), and it is further reinforced if such foreign investments involve R&D activities. We also find that green-tech R&D FDIs have a larger effect in regions whose prior knowledge base is highly unrelated to environmental technologies. Furthermore, green-tech FDIs in R&D contribute to maintaining the specialisation of regions in environmental technologies over time, while it is only for high levels of unrelatedness that such FDIs help regions acquire a green-tech specialisation ex novo.