This Paper presents an empirical study of the effect of foreign multinational companies on the development of indigenous firms in the host country. Our starting point is a recent paper by Markusen and Venables (1999) that shows formally that multinationals, through the creation of linkages with indigenous suppliers, can exert positive effects on the development of indigenous firms. Based on the literature on entry in industrial organisation, we estimate empirically a model describing the entry of indigenous firms using data for the Irish manufacturing sector. Our results indicate that there is a positive effect of multinational companies on the entry of indigenous firms for a variety of alternative specifications.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
3325.
Find related papers by JEL classification: F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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Acs, Zoltan J & Audretsch, David B, 1989.
"Small-Firm Entry in U.S. Manufacturing,"
Economica,
London School of Economics and Political Science, vol. 56(222), pages 255-65, May.
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