Local learning from multinational plants: Knowledge transfers in the supply chain

Knowledge and local learning are central to current debates about regional economic development. Using data provided by multinational plants, this paper provides new evidence on the geography of knowledge, emphasizing the proximity of Northern Ireland-based multinational plants to global best practice but highlighting what are, in some cases, substantial 'knowledge gaps' to local suppliers. The paper also examines the incidence of various activities that might facilitate the transfer of knowledge front multinationals to their suppliers, and investigates the impact of these activities on the competitiveness of local supplier companies. Our results indicate that there is considerable scope for local learning by the suppliers of multinational plants, and show that many of these multinational plants are currently engaged in a range of knowledge transfer activities with their suppliers. However, the results also suggest that in small regions, such as Northern Ireland, weak local supply chains will tend to result in a socially sub-optimal level of knowledge transfer to local firms. Policy intervention may therefore be required both to strengthen local supply chains and also to provide alternative mechanisms to allow local firms to learn from multinational plants.