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Efficiency of Manufacturing in Russia: Effect of Domestic Competition and FDI

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  • Bessonova, Eugenia

    (CEFIR, Moscow, Russia)

Abstract

In this paper we investigate the effect of the entry of foreign firms on the efficiency of Russian industrial enterprises using the panel firm level dataset for 1995-2004. The analysis of the competition structure of Russian industrial sectors reveals that domestic concentration ratios remain high at regional level. We find that foreign entry has positive effect on the productivity of most efficient domestic firms. The effect of foreign entry on productivity of inefficient firms is negative. Our findings show that positive effect from foreign competition appears to be restrained by barriers preventing exit of inefficient firms.

Suggested Citation

  • Bessonova, Eugenia, 2010. "Efficiency of Manufacturing in Russia: Effect of Domestic Competition and FDI," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 17(1), pages 106-127.
    • Handle: RePEc:ris:apltrx:0080
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    References listed on IDEAS

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    1. B. Merlevede & K. Schoors, 2006. "FDI and the Consequences Towards more complete capture of spillover effects," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/372, Ghent University, Faculty of Economics and Business Administration.
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    6. Annette Brown & J. David Brown, 1998. "Does Market Structure Matter?: New Evidence From Russia," William Davidson Institute Working Papers Series 159, William Davidson Institute at the University of Michigan.
    7. Philippe Aghion & Richard Blundell & Rachel Griffith & Peter Howitt & Susanne Prantl, 2009. "The Effects of Entry on Incumbent Innovation and Productivity," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 20-32, February.
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    12. Bessonova, Eugenia, 2007. "An Estimation of the Production Efficiency of Russian Industrial Firms," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 6(2), pages 13-35.
    13. Joze P. Damijan & Jose de Sousa & Olivier Lamotte, 2008. "Does international openness affect productivity of local firms? Evidence from Southeastern Europe," LICOS Discussion Papers 21908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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    Cited by:

    1. Kudrin, Alexey & Gurvich, Evsej T., 2015. "A new growth model for the Russian economy," BOFIT Policy Briefs 1/2015, Bank of Finland Institute for Emerging Economies (BOFIT).
    2. Kudrin, Alexey & Gurvich, Evsey, 2015. "A new growth model for the Russian economy1," Russian Journal of Economics, Elsevier, vol. 1(1), pages 30-54.

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    More about this item

    Keywords

    competition; fixed effects estimations; foreign direct investment; total factor productivity; stochastic frontier;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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