Abstract: This paper examines the effects of inward FDI on economic growth across the Spanish regions over the period
1996-2013, paying particular attention to the "headquarters effect", namely that FDI is not always registered
where it is effectively made but in the region in which the firm's headquarters is located. By estimating a panel
Spatial Durbin Model to allow for the detection of spatial spillovers, two main findings are reported. First, FDI
does foster economic growth. Second, only when the headquarters effect is properly addressed do spatial spillovers arise. Hence, this effect is masking the impact of regional FDI spillovers on growth, which affects the
reliability of the results and, consequently, FDI policies choice. Importantly, the results are: a) robust to the way
of computing the headquarters effect; b) independent of the spatial weight matrix specification; and c) confirmed when splitting FDI into different industrial and service branches
