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Suppliers of multinationals and the forced linkage effect: Evidence from firm level data

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  • Godart, Olivier
  • Görg, Holger

Abstract

Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a “forced linkage effect” from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier- customer relationship and when endogeneity concerns are taken into consideration.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9324.

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Date of creation: Jan 2013
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Handle: RePEc:cpr:ceprdp:9324

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Keywords: backward linkages; forced linkage; multinational customers; productivity spillovers; suppliers;

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  1. Gorodnichenko, Yuriy & Svejnar, Jan & Terrell, Katherine, 2007. "When Does FDI Have Positive Spillovers? Evidence from 17 Emerging Market Economies," CEPR Discussion Papers 6546, C.E.P.R. Discussion Papers.
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Cited by:
  1. Holger Görg & Adnan Seric, 2013. "With a little help from my friends: Supplying to multinationals, buying from multinationals, and domestic firm performance," Kiel Working Papers 1867, Kiel Institute for the World Economy.

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