Feature Articles
Estimating the Spillover Effects from EDB-Supported Firms
21 November 2025
The Economic Development Board (EDB)’s strategy of attracting foreign multinational corporations (MNCs) and developing high-potential local companies has generated economy-wide benefits. Besides their direct contributions to Singapore’s economy, this study finds that EDB-supported firms (or EDB firms for short) also have net positive spillover effects on non-EDB firms.
In particular, exposure to EDB firms was found to improve the performance of non-EDB firms across four outcomes. Specifically, a 10 per cent increase in exposure to EDB firms improved the value-added (VA), VA per worker, local employment and local wages of non-EDB firms by 8.3 per cent, 6.2 per cent, 1.5 per cent and 1.6 per cent on average, respectively. These positive spillover effects were driven largely by the labour market channel, with EDB firms helping to improve the quality of the workforce in Singapore that in turn benefitted non-EDB firms. By contrast, EDB firms had a small negative impact on non-EDB firms that were upstream to EDB firms (i.e., negative backward spillovers), likely reflecting constraints that limit non-EDB firms’ ability to supply inputs to EDB firms and hence gain from the increase in demand generated by EDB firms.
Overall, we estimate that between 2012 and 2019, the net spillover benefits that each EDB firm brought to non-EDB firms amounted to $48.5 million in value-added (VA) annually. This represents 41 per cent of the total (i.e., direct and spillover) economic contributions of EDB firms to Singapore.
While the overall net impact of EDB firms on non-EDB firms is positive, there is scope for policymakers to explore mechanisms to strengthen the positive spillovers while mitigating the negative effects across the various spillover channels. This could include supporting capability building programmes for non-EDB firms and their employees to enhance their ability to attract skilled labour and benefit from knowledge spillovers through the labour market, while implementing supplier development initiatives to help them capitalise on increased business opportunities from EDB firms. This would ensure that Singapore captures maximum economic value from its strategic investments in high-quality firms.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore