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Foreign and Domestic Firms in Colombia: How Do They Differ?

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  • Peter Rowland
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    Abstract

    This paper studies foreign and domestic firms in Colombia and, in particular, whether these firms behave differently. The study uses a dataset containing the 2003 balance sheets and income statements for some 7,001 firms. The dataset was obtained from the Superintendencia de Sociedades. The study concludes that foreign and domestic firms differ in a number of aspects. Foreign firms tend to have a larger total asset turnover than domestic firms; they are more leveraged than domestic firms; and they tend to have a lower net-profit margin than domestic firms. However, these results are not conclusive. When the dataset is broken down by sector, the results are much less clear. When analysing external debt, foreign firms do, nevertheless, tend to hold almost four times as much external debt as domestic firms of the same size. Foreign firms also tend to import more.

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    Bibliographic Info

    Paper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 375.

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    Handle: RePEc:bdr:borrec:375

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    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Rachel Griffith & Helen Simpson, 2001. "Characteristics of foreign-owned firms in British manufacturing," IFS Working Papers W01/10, Institute for Fiscal Studies.
    3. Wolfgang Keller & Stephen R. Yeaple, 2003. "Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States," NBER Working Papers 9504, National Bureau of Economic Research, Inc.
    4. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," NBER Working Papers 8724, National Bureau of Economic Research, Inc.
    5. Salvador Barrios & Sophia Dimelis & Helen Louri & Eric Strobl, . "Efficiency Spillovers from Foreign Direct Investment in the EU Periphery: A comparative study of Greece, Ireland and Spain," Working Papers 2002-02, FEDEA.
    6. Stephen R. Yeaple & Wolfgang Keller, 2003. "Multinational Enterprises, International Trade, and Productivity Growth," IMF Working Papers 03/248, International Monetary Fund.
    7. Jason G. Cummins & R. Glenn Hubbard, 1994. "The Tax Sensitivity of Foreign Direct Investment: Evidence from Firm-Level Panel Data," NBER Working Papers 4703, National Bureau of Economic Research, Inc.
    8. Ann E. Harrison & Margaret S. McMillan, 2001. "Does Direct Foreign Investment Affect Domestic Firms' Credit Constraints?," NBER Working Papers 8438, National Bureau of Economic Research, Inc.
    9. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," CEPR Discussion Papers 1365, C.E.P.R. Discussion Papers.
    10. Barajas, Adolfo & Steiner, Roberto & Salazar, Natalia, 2000. "The impact of liberalization and foreign investment in Colombia's financial sector," Journal of Development Economics, Elsevier, vol. 63(1), pages 157-196, October.
    11. Lee Branstetter, 2000. "Is Foreign Direct Investment a Channel of Knowledge Spillovers? Evidence from Japan's FDI in the United States," NBER Working Papers 8015, National Bureau of Economic Research, Inc.
    12. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
    13. Carlos Andrés Amaya G. & Peter Rowland, 2004. "Determinants Of Investment Flows Into Emerging Markets," BORRADORES DE ECONOMIA 002334, BANCO DE LA REPÚBLICA.
    14. Peter Rowland, 2005. "Foreign and Domestic Firms in Colombia: Exports, Imports and External Debt," BORRADORES DE ECONOMIA 002739, BANCO DE LA REPÚBLICA.
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