As more developing and transition market firms (southern MNCs) are engaged in outward FDI in European advanced economies, a fundamentally important question has to be addressed: whether this investment leads to positive pr oductivity effects for host economies. Our paper addresses this issue by examining whether there are signs of regional spillovers from the entry and the presence of southern MNCs in the service/construction industry. We highlight that regional spillovers from southern MNCs are c o - determined by local and foreign character istics, namely, FDI motivation and technological capac ity of the local host country firms . Possible interaction effects between local technological capacity and FDI motivation would also influence the size and the extent of regional spillovers from southern MNCs. Using firms - level data from Switzerland, we found that knowledge - exploiting FDI (KE FDI) and knowledge - seeking FDI (KS FDI) have different amounts of spillovers. In addition, h uman capital development in l ocal firms appears to be essential in gain ing large regional spillovers. It allows for positive regional spillovers for high technology firms when southern MNCs are assigned KE mandate and for low technology firms when southern MNCs invest in KS FDI.