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Multinationals, foreign ownership and US productivity leadership: Evidence from the UK

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  • Criscuolo, Chiara
  • Ralf Martin

    (Centre for Research into Business Activity)

Abstract

Several studies using firm level data find that foreign-owned firms are more productive than domestic ones. This could reflect a foreign advantage or an omitted variable bias: foreign firms are by definition multinational enterprises (MNEs), and MNEs are typically more productive than non-MNEs. This paper attempts to discriminate between these hypotheses. We are the first to study the productivity of foreign owned firms relative to UK firms separated into MNEs and non-MNEs. We obtain three main results. First, the foreign productivity advantage is mostly a multinational advantage: MNEs, foreign and UK, are more productive than non-MNEs. Second, US owned firms maintain a productivity advantage with respect to both UK and other foreign owned firms. Third, examining the longitudinal dimension of our data we find no evidence that higher MNE productivity is driven by sharing superior firm specific knowledge among affiliated plants. Thus, the MNE advantage must lie in an ability to takeover already productive plants or in setting up above average productivity plants on green field.

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2003 with number 50.

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Date of creation: 04 Jun 2003
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Handle: RePEc:ecj:ac2003:50

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Keywords: Multinational Firms; Productivity; Foreign Ownership; US leadership; Double Fixed-Effects;

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Cited by:
  1. Martin Boddy & John Hudson & Anthony Plumridge & Don Webber, 2005. "Regional Productivity Differentials: Explaining the Gap," Working Papers 0515, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  2. Giorgio Barba Navaretti & Davide Castellani, 2003. "Investments Abroad and Performance at Home Evidence from Italian Multinationals," Development Working Papers 180, Centro Studi Luca d\'Agliano, University of Milano.
  3. Priit Vahter & Jaan Masso, 2005. "Home Versus Host Country Effects of FDI: Searching for New Evidence of Productivity Spillovers," Bank of Estonia Working Papers 2005-13, Bank of Estonia, revised 10 Dec 2005.
  4. Raymond Mattaloni Jr., 2011. "The Productivity Advantage and Global Scope of U.S. Multinational Firms," BEA Working Papers 0070, Bureau of Economic Analysis.
  5. Ralf Martin, 2005. "Productivity Dispersion, Competition and Productivity Measurement," CEP Discussion Papers dp0692, Centre for Economic Performance, LSE.
  6. Davide Castellani & Giorgia Giovannetti, 2010. "Productivity and the international firm: dissecting heterogeneity," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(1), pages 25-42.

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