Foreign firms and host-country productivity: does the mode of entry matter?
AbstractForeign direct investment is considered an important source of knowledge spillovers. We argue that the effects of foreign presence on host-country productivity may differ depending on the mode of foreign entry. Using a long panel from the Norwegian Manufacturing Census, we find that greenfield entry both in the same industry and in the same labour market region has a negative impact on the productivity of domestic plants, while entry via acquisition affects the productivity of domestic plants in the same industry positively. The positive effect from acquisitions is consistent with knowledge spillovers as these plants have pre-established linkages within the industry. The negative effects from greenfield entry can be attributed to increased competition both in the product market and for qualified employees in a tight labour market. Our results help to explain the ambiguity of results in the empirical literature that relates overall foreign presence to host-country productivity. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 63 (2011)
Issue (Month): 1 (January)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Wagner, Joachim, 2011.
"Productivity and International Firm Activities: What Do We Know?,"
IZA Policy Papers
23, Institute for the Study of Labor (IZA).
- Joachim Wagner, 2011. "Productivity and International Firm Activities: What do we know?," Working Paper Series in Economics 194, University of Lüneburg, Institute of Economics.
- Eicher, Theo S. & Helfman, Lindy & Lenkoski, Alex, 2012.
"Robust FDI determinants: Bayesian Model Averaging in the presence of selection bias,"
Journal of Macroeconomics,
Elsevier, vol. 34(3), pages 637-651.
- Theo S Eicher & Lindy Helfman & Alex Lenkoski, 2011. "Robust FDI Determinants: Bayesian Model Averaging In The Presence Of Selection Bias," Working Papers UWEC-2011-07-FC, University of Washington, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.