Rosario Crinò (Università degli Studi di Milano and CESPRI - Bocconi University, Milan, Italy.) Fabrizio Onida (CESPRI, Bocconi University, Milan, Italy.)
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This paper studies the effects of foreign participation on economic performance in Lombardy, a Northern Italian region accounting for more than 40% of Foreign Direct Investment inflows in Italy. We employ a large database consisting of balance sheet and foreign ownership information for more than 13,000 firms and analyze different dimensions of economic performance: capital and knowledge-intensity, productivity, wages, returns to investments and financial structure. We find that foreign multinationals are more knowledge-intensive, more productive, pay higher wages and show a more solid financial structure than national firms; at the same time, foreign multinationals show lower returns to investments. Propensity score estimation results show that this difference implies a true effect from foreign participation in the manufacturing sector; in the services sector, instead, the difference in favour of multinationals is mostly accounted for by a differential pattern of industry location between the two types of firms, by the larger size of multinationals and by the likely tendency of the latter to invest in already high-performing national firms.
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Paper provided by CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy in its series CESPRI Working Papers with number
207.
Length: pages 56 Date of creation: Nov 2007 Date of revision:
Nov 2007 Handle: RePEc:cri:cespri:wp207
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Find related papers by JEL classification: F1 - International Economics - - Trade F2 - International Economics - - International Factor Movements and International Business
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