IDEAS home Printed from https://ideas.repec.org/a/ukm/jlekon/v46y2012i1p119-132.html
   My bibliography  Save this article

Foreign Presence and Market Concentration in Malaysian Manufacturing Industries

Author

Listed:
  • Adam, Radziah

    (School of Distance Education Universiti Sains Malaysia 11800 USM, Penang MALAYSIA)

  • khalifah, noor

    (School of Economics Faculty of Economics and Management Universiti Kebangsaan Malaysia 43600 Bangi, Selangor MALAYSIA)

Abstract

This paper examines the relationship between foreign presence and market concentration and thus competition in the Malaysian manufacturing sector by looking at the determinants of foreign presence and market concentration respectively. Using a panel of aggregate 5-digit Malaysian manufacturing industries for 2001-04, different extents and proxies of foreign presence are utilized to test the hypothesis that higher foreign presence leads to more concentrated market. The single equation results show that foreign presence, in terms of fixed assets share, has no significant impact on increasing the level of market concentration, while higher foreign presence in an industry, in regards to both value added and employment shares, significantly contributes towards more concentrated markets. On the other hand, a highly concentrated market is also one of the significant determinants for all proxies of foreign presence. In both instances, the extent of foreign shareholdings does not matter as much as the types of proxy used to measure foreign presence. However, a system of four equations, including market concentration (under the Structure-Conduct-Performance framework) and foreign presence, estimated using Two-Stage Least Squares (2SLS) with fixed effects shows no significant evidence to support the existence of simultaneity between market concentration and foreign presence.

Suggested Citation

  • Adam, Radziah & khalifah, noor, 2012. "Foreign Presence and Market Concentration in Malaysian Manufacturing Industries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 46(1), pages 119-132.
    • Handle: RePEc:ukm:jlekon:v:46:y:2012:i:1:p:119-132
    as

    Download full text from publisher

    File URL: http://www.ukm.my/jem/wp-content/uploads/2021/06/jeko_461-11.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Noor Aini Khalifah, 2000. "A Typology Of Malaysia'S Trade Flows (1990-1997): Structural Shifts In The Merchandise Trade Balance," IIUM Journal of Economics and Management, IIUM Journal of Economis and Management, vol. 8(2), pages 109-138, December.
    2. Newfarmer, Richard S. & Marsh, Lawrence C., 1981. "Foreign ownership, market structure and industrial performance : Brazil's electrical industry," Journal of Development Economics, Elsevier, vol. 8(1), pages 47-75, February.
    3. Fredrik Sjoholm, 1999. "Technology gap, competition and spillovers from direct foreign investment: Evidence from establishment data," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 53-73.
    4. Charles DeLorme & Peter Klein & David Kamerschen & Lisa Ford Voeks, 2003. "Structure, conduct and performance: a simultaneous equations approach," Applied Economics, Taylor & Francis Journals, vol. 35(1), pages 13-20.
    5. Nor Ghani Md. Nor & Ahmad Zainuddin Abdullah & Khalil Md. Nor, 2006. "Vertical Integration, Foreign Multinationals and Stigler's Hypotheses: An Empirical Test Using Malaysian Data," Asian Economic Journal, East Asian Economic Association, vol. 20(3), pages 257-274, September.
    6. Marcelo Resende, 2007. "Structure, conduct and performance: a simultaneous equations investigation for the Brazilian manufacturing industry," Applied Economics, Taylor & Francis Journals, vol. 39(7), pages 937-942.
    7. Md Noor, Nor Ghani & Osman, Zulkifly & abdullah, ahmad & Jun, Chin Yit, 2000. "Trends in the Malaysian Industrial Market Structures," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 34, pages 3-20.
    8. Uma Kambhampati, 2000. "Industry competitiveness: leadership identity and market shares," Applied Economics Letters, Taylor & Francis Journals, vol. 7(9), pages 569-573.
    9. Gupta, Vinod K, 1983. "A Simultaneous Determination of Structure, Conduct and Performance in Canadian Manufacturing," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 281-301, July.
    10. Chhibber, Pradeep K & Majumdar, Sumit K, 1999. "Foreign Ownership and Profitability: Property Rights, Control, and the Performance of Firms in Indian Industry," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 209-238, April.
    11. G. Rosenbluth, 1970. "The Relation between Foreign Control and Concentration in Canadian Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 3(1), pages 14-38, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Devadason, Evelyn & Subramaniam, Thirunaukarasu, 2014. "Trade Linkages and Domestic Market Concentration: An Empirical Exploration for Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 3-12.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Noor Aini Khalifah & Radziah Adam, 2009. "Productivity Spillovers from FDI in Malaysian Manufacturing: Evidence from Micro‐panel Data," Asian Economic Journal, East Asian Economic Association, vol. 23(2), pages 143-167, June.
    2. Kumar, Nagesh, 1996. "Foreign Direct Investments and Technology Transfers in Development: A Perspective on Recent Literature," UNU-INTECH Discussion Paper Series 1996-06, United Nations University - INTECH.
    3. Wang, Shinn-Shyr & Stiegert, Kyle W. & Rogers, Richard T., 2006. "Structural Change in the U.S. Food Manufacturing Sector," 2006 Annual meeting, July 23-26, Long Beach, CA 21045, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Michael D. Clemes & Baiding Hu & Xuedong Li, 2016. "Services and economic growth in China: an empirical analysis," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 612-627, October.
    5. O'Shaughnessy, Eric, 2019. "Non-monotonic effects of market concentration on prices for residential solar photovoltaics in the United States," Energy Economics, Elsevier, vol. 78(C), pages 182-191.
    6. Almas Heshmati & Rachid El-Rhinaoui, 2009. "Effects of Ownership and Market Share on Performance of Mobile Operators in MENA Region," TEMEP Discussion Papers 200921, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    7. Tanveer Ahmad Khan & Indrani Chakraborty, 2022. "Dynamic Interactions Between Structure and Performance in the Textile and Clothing Industry in India: An Econometric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 20(1), pages 173-209, March.
    8. Devadason, Evelyn & Subramaniam, Thirunaukarasu, 2014. "Trade Linkages and Domestic Market Concentration: An Empirical Exploration for Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(1), pages 3-12.
    9. Georgios Fotopoulos & Helen Louri, 2004. "Firm Growth and FDI: Are Multinationals Stimulating Local Industrial Development?," Journal of Industry, Competition and Trade, Springer, vol. 4(3), pages 163-189, September.
    10. Keshari, Pradeep Kumar, 2013. "Comparative performance of foreign affiliates and domestic firms in the Indian machinery industry," MPRA Paper 33076, University Library of Munich, Germany, revised 20 Apr 2013.
    11. Setiawan, Maman & Emvalomatis, Grigorios & Oude Lansink, Alfons, 2012. "The relationship between technical efficiency and industrial concentration: Evidence from the Indonesian food and beverages industry," Journal of Asian Economics, Elsevier, vol. 23(4), pages 466-475.
    12. Kyle W. Stiegert & Shinn-Shyr Wang & Richard T. Rogers, 2009. "Structural change and market power in the U.S. food manufacturing sector," Agribusiness, John Wiley & Sons, Ltd., vol. 25(2), pages 164-180.
    13. Kv, Bhanu Murthy & Deb, Ashis Taru, 2008. "Operationalizing and Measuring Competition: Determinants of Competition in Private Banking Industry in India," MPRA Paper 7463, University Library of Munich, Germany.
    14. Greenaway, David & Görg, Holger, 2002. "Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?," CEPR Discussion Papers 3485, C.E.P.R. Discussion Papers.
    15. Ali Osman Gurbuz & Asli Aybars, 2010. "The Impact of Foreign Ownership on Firm Performance, Evidence from an Emerging Market: Turkey," American Journal of Economics and Business Administration, Science Publications, vol. 2(4), pages 350-359, November.
    16. Blomström, Magnus & Kokko, Ari, 2003. "Human Capital and Inward FDI," CEPR Discussion Papers 3762, C.E.P.R. Discussion Papers.
    17. Bhatta, Bibek & Marshall, Andrew P. & Neupane-Joshi, Suman & Thapa, Chandra, 2021. "Foreign Ownership and the Enforcement of Corporate Governance Reforms," QBS Working Paper Series 2021/02, Queen's University Belfast, Queen's Business School.
    18. Victoria Kravtsova, 2008. "Foreign presence and efficiency in transition economies," Journal of Productivity Analysis, Springer, vol. 29(2), pages 91-102, April.
    19. David Greenaway & Alessandra Guariglia & Zhihong Yu, 2014. "The more the better? Foreign ownership and corporate performance in China," The European Journal of Finance, Taylor & Francis Journals, vol. 20(7-9), pages 681-702, September.
    20. Chu, Hsiao-Ping & Yeh, Ming-Liang & Sher, Peter J. & Chiu, Yi-Chia, 2007. "Will the leading firm continue to dominate the market in the Taiwan notebook industry?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 383(2), pages 473-479.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ukm:jlekon:v:46:y:2012:i:1:p:119-132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Asri Abd Ghani (email available below). General contact details of provider: https://edirc.repec.org/data/feukmmy.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.