Quantifying Productivity Gains from Foreign Investment
AbstractWe quantify the causal effect of foreign investment on total factor productivity (TFP) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling for unobservable firm and country-sector-year factors. Using our well identified firm level estimates for the direct effect of foreign ownership on acquired firms and for the spillover effects on domestic firms, we calculate the aggregate impact of foreign investment on country-level productivity growth and find it to be very small.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 13-058/IV.
Date of creation: 11 Apr 2013
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Multinationals; FDI; Knowledge Spillovers; Selection; Productivity;
Other versions of this item:
- Fons-Rosen, Christian & Kalemli-Ozcan, Sebnem & Sørensen, Bent E & Villegas-Sanchez, Carolina & Volosovych, Vadym, 2013. "Quantifying Productivity Gains from Foreign Investment," CEPR Discussion Papers 9434, C.E.P.R. Discussion Papers.
- Christian Fons-Rosen & Sebnem Kalemli-Ozcan & Bent E. Sørensen & Carolina Villegas-Sanchez & Vadym Volosovych, 2013. "Quantifying Productivity Gains from Foreign Investment," NBER Working Papers 18920, National Bureau of Economic Research, Inc.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- F15 - International Economics - - Trade - - - Economic Integration
- F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-EFF-2013-04-27 (Efficiency & Productivity)
- NEP-IFN-2013-04-27 (International Finance)
- NEP-MAC-2013-04-27 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wooldridge, Jeffrey M., 2009. "On estimating firm-level production functions using proxy variables to control for unobservables," Economics Letters, Elsevier, vol. 104(3), pages 112-114, September.
- Mathias M. Siems & Michael C. Schouten, 2009. "The Evolution of Ownership Disclosure Rules across Countries," ESRC Centre for Business Research - Working Papers wp393, ESRC Centre for Business Research.
- Sanfilippo , Marco, 2013. "Investing abroad from the bottom of the productivity ladder – BRICS multinationals in Europe," BOFIT Discussion Papers 26/2013, Bank of Finland, Institute for Economies in Transition.
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