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Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels

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  • Eric Ramstetter
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    Abstract

    This paper uses micro data and published compilations of micro data to estimate shares of multinational corporations (MNCs) in Southeast Asian manufacturing. It first shows that MNC shares tended to be largest in Singapore, intermediate in Malaysia and (recently) in Vietnam, and lowest in Thailand and Indonesia. Shares tended to decline in Singapore and Thailand, were relatively constant in Malaysia, and increased in Indonesia and Vietnam. Shares of majority foreign MNCs also increased conspicuously in Indonesia and Thailand as MNCs bought out local partners in joint ventures after the Asian crisis. Second, it highlights how MNC shares were always lowest in terms of the number of plants or establishments, or in other words, how MNCs tended to be larger on average than local firms or plants. MNCs also tended to account for larger shares of production than employment, and even larger shares of exports. Hence MNCs tended to have relatively high labor productivity and export propensities. Because these simple comparisons do not account for other influences on productivity, wages, or exporting, for example, the paper also describes how micro-data have been used to analyze productivity, wages, and export propensities. This literature suggests that productivity differentials were generally positive but often statistically insignificant, especially at the industry level. Wage differentials were also positive and more often significant, but the largest and most consistent differentials are observed in export propensities. Third, the paper also reviewed literature suggesting positive productivity and wage spillovers in Indonesia, Thailand, and to some extent Vietnam. However, such analyses need to be treated with caution because unwarranted pooling across manufacturing industries is common and has the well-known potential to bias estimates. In addition, the paper emphasized that balanced panels can create important sampling biases because of large turnover that is particularly conspicuous among small non-MNCs in this dynamic region.

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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-106.pdf
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    Bibliographic Info

    Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd09-106.

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    Date of creation: Dec 2009
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    Handle: RePEc:hst:ghsdps:gd09-106

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    Keywords: micro data; manufacturing; Southeast Asia; multinational corporations;

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    References

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    1. Takii, Sadayuki, 2005. "Productivity spillovers and characteristics of foreign multinational plants in Indonesian manufacturing 1990-1995," Journal of Development Economics, Elsevier, vol. 76(2), pages 521-542, April.
    2. Sanjaya Lall, . "Export Performance and Competitiveness in the Philippines," QEH Working Papers qehwps49, Queen Elizabeth House, University of Oxford.
    3. Lipsey, Robert E. & Sjöholm, Fredrik, 2002. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," EIJS Working Paper Series 166, The European Institute of Japanese Studies.
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    6. repec:ebl:ecbull:v:12:y:2007:i:30:p:1-12 is not listed on IDEAS
    7. Keiko Ito, 2004. "Foreign Ownership and Productivity in the Indonesian Automobile Industry: Evidence from Establishment Data for 1990–99," NBER Chapters, in: Growth and Productivity in East Asia, NBER-East Asia Seminar on Economics, Volume 13, pages 229-276 National Bureau of Economic Research, Inc.
    8. Anh Ngoc Nguyen & Nguyen Thang & Le Dang Trung & Ngoc Quang Pham & Chuc Dinh Nguyen & Nhat Duc Nguyen, 2008. "Foreign Direct Investment in Vietnam: Is There Any Evidence Of Technological Spillover Effects," Working Papers 18, Development and Policies Research Center (DEPOCEN), Vietnam.
    9. Lee, Cassey, 2004. "The Determinants of Innovation in the Malaysian Manufacturing Sector: An Econometric Analysis at the Firm Level," Centre on Regulation and Competition (CRC) Working papers 30670, University of Manchester, Institute for Development Policy and Management (IDPM).
    10. Rasiah, Rajah, 2003. "Foreign ownership, technology and electronics exports from Malaysia and Thailand," Journal of Asian Economics, Elsevier, vol. 14(5), pages 785-811, October.
    11. Cassey Lee & Lee Chew ging, 2007. "SME Innovation in the Malaysian Manufacturing Sector," Economics Bulletin, AccessEcon, vol. 12(30), pages 1-12.
    12. Lipsey, Robert E. & Sjoholm, Fredrik, 2004. "Foreign direct investment, education and wages in Indonesian manufacturing," Journal of Development Economics, Elsevier, vol. 73(1), pages 415-422, February.
    13. Menon, Jayant, 1998. "Total factor productivity growth in foreign and domestic firms in Malaysian manufacturing," Journal of Asian Economics, Elsevier, vol. 9(2), pages 251-280.
    14. Robert Lipsey & Fredrik Sjöholm, 2004. "FDI and wage spillovers in Indonesian manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(2), pages 321-332, June.
    15. Ito, Keiko, 2004. "Foreign ownership and plant productivity in the Thai automobile industry in 1996 and 1998: a conditional quantile analysis," Journal of Asian Economics, Elsevier, vol. 15(2), pages 321-353, April.
    16. Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810.
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    Cited by:
    1. Sjöholm, Fredrik, 2013. "Foreign Direct Investments in Southeast Asia," Working Papers 2013:37, Lund University, Department of Economics.

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