This study uses firm-level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms' productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over-proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number
1413.
Find related papers by JEL classification: F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
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Holger Görg & Eric Strobl, 2003.
""Footloose" Multinationals?,"
Manchester School,
University of Manchester, vol. 71(1), pages 1-19, January.
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