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Foreign ownership, sales to multinationals and firm efficiency: the case of Brazil, Morocco, Pakistan, South Africa and Vietnam

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  • Tidiane Kinda

Abstract

Using a one-step stochastic frontier model for five developing countries, this article shows that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. This article uses the share of each firm's sales to multinationals located in the country to assess the importance of vertical spillovers, while controlling for the direct impact of the investment climate on efficiency. The results show that firms, particularly small local firms, selling more of their production to multinationals are more efficient, highlighting the presence of vertical spillovers through backward linkages.

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  • Tidiane Kinda, 2012. "Foreign ownership, sales to multinationals and firm efficiency: the case of Brazil, Morocco, Pakistan, South Africa and Vietnam," Applied Economics Letters, Taylor & Francis Journals, vol. 19(6), pages 551-555, April.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:6:p:551-555
    DOI: 10.1080/13504851.2011.587765
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    Cited by:

    1. Tidiane Kinda, 2018. "The quest for non-resource-based FDI: Do taxes matter?," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 11(1), pages 1-18, January.
    2. Stefania Lovo & Gonzalo Varela, 2022. "Internationally Linked Firms and Productivity in Pakistan: A Look at the Top End of the Distribution," Journal of Development Studies, Taylor & Francis Journals, vol. 58(10), pages 2110-2131, October.
    3. Combes, Jean-Louis & Kinda, Tidiane & Plane, Patrick, 2012. "Capital flows, exchange rate flexibility, and the real exchange rate," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1034-1043.
    4. International Monetary Fund, 2015. "Republic of Poland: Selected Issues," IMF Staff Country Reports 2015/183, International Monetary Fund.
    5. Jean-Louis COMBES & Patrick PLANE & Tidiane KINDA & Rasmané OUEDRAOGO, 2017. "Does It Pour When it Rains? Capital Flows and Economic Growth in Developing Countries," Working Papers P157, FERDI.
    6. Victor Stolzenburg & Marianne Matthee & Caro Janse van Rensburg & Carli Bezuidenhout, . "Foreign direct investment and gender inequality: evidence from South Africa," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    7. Quan Tran & Anh‐Tuan Doan & Thao Tran, 2021. "Small and medium enterprises' credit access, ownership structure and job development," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 710-735, December.
    8. Lovo,Stefania & Varela,Gonzalo J., 2020. "Internationally Linked Firms, Integration Reforms and Productivity : Evidence from Pakistan," Policy Research Working Paper Series 9349, The World Bank.
    9. Combes, Jean-Louis & Kinda, Tidiane & Ouedraogo, Rasmané & Plane, Patrick, 2019. "Financial flows and economic growth in developing countries," Economic Modelling, Elsevier, vol. 83(C), pages 195-209.
    10. Baliamoune-Lutz, Mina & Basuony, Mohamed A. K. & Lutz, Stefan & Mohamed, Ehab K. A., 2022. "International ownership and SMEs in Middle Eastern and African economies," Working Paper Series 22, Frankfurt University of Applied Sciences, Faculty of Business and Law.
    11. Adugna Lemi & Ian Wright, 2020. "Exports, foreign ownership, and firm-level efficiency in Ethiopia and Kenya: an application of the stochastic frontier model," Empirical Economics, Springer, vol. 58(2), pages 669-698, February.
    12. Mr. Tidiane Kinda, 2019. "E-commerce as a Potential New Engine for Growth in Asia," IMF Working Papers 2019/135, International Monetary Fund.

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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