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Multinationals and U.S. Productivity Leadership: Evidence from Great Britain

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Author Info
Chiara Criscuolo
Ralf Martin ()

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Abstract

US plant level studies show US multinational enterprises (MNE) are more productive than other MNEs. This could reflect US productivity leadership or could be due to the ease in which US firms operate in their home surroundings. The evidence would therefore be more compelling if US firms were leaders outside the US. We study the productivity of plants owned by US firms located in the UK. Our study differs from many studies of foreign owned plants in three ways. Firstly, using a newly available dataset we can identify not only foreign but also domestic MNEs. We find that UK MNEs are less productive than US owned plants, but as productive as non US foreign owned plants. Secondly, having a panel dataset we distinguish between different hypotheses regarding the nature of the US and MNE advantage. We find strong evidence that the US advantage lies in the ability to takeover already productive plants. Whereas we find some evidence for a shared asset effect for MNEs in general we do not find any evidence that the US advantage is driven by superior shares assets. Thirdly, this paper features a novel approach to TFP calculation.

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Paper provided by OECD Directorate for Science, Technology and Industry in its series OECD Science, Technology and Industry Working Papers with number 2004/5.

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Date of creation: 21 Apr 2004
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Handle: RePEc:oec:stiaaa:2004/5-en

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Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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  1. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEPR Discussion Papers 6291, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Girma, Sourafel & Görg, Holger, 2006. "Evaluating the Foreign Ownership Wage Premium Using a Difference-in-Differences Matching Approach," CEPR Discussion Papers 5788, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Carol Corrado & Paul Lengermann & Larry Slifman, 2007. "The contribution of multinational corporations to U.S. productivity growth, 1977-2000," Finance and Economics Discussion Series 2007-21, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  4. Helen Simpson, 2007. "Investment abroad and adjustment at home: evidence from UK multinational firms," IFS Working Papers W07/07, Institute for Fiscal Studies. [Downloadable!]
  5. Giorgia Maffini & Socrates Mokkas, 2008. "Transfer-pricing and Measured Productivity of Multinational Firms," Working Papers 0817, Oxford University Centre for Business Taxation. [Downloadable!]
  6. Chiara Criscuolo & Jonathan E. Haskel & Matthew J. Slaughter, 2005. "Global Engagement and the Innovation Activities of Firms," NBER Working Papers 11479, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Davide Castellani & Ilaria Mariotti & Lucia Piscitello, 2006. "Outward investments and skill upgrading. Evidence from the Italian case," CESPRI Working Papers 185, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Nov 2006. [Downloadable!]
  8. Ben S. Bernanke, 2006. "The new economic geography: opening remarks," Proceedings, Federal Reserve Bank of Kansas City, pages 1-14. [Downloadable!]
  9. Börje Johansson & Hans Lööf & Amy Rade Olsson, 2005. "Firm location, Corporate Structure, R&D Investment, Innovation and Productivity," ERSA conference papers ersa05p108, European Regional Science Association. [Downloadable!]
    Other versions:
  10. Johansson, Börje & Lööf, Hans, 2005. "FDI Inflows to Sweden Consequences for Innovation and Renewal," Working Paper Series in Economics and Institutions of Innovation 36, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  11. Robert Breunig & Marn-Heong Wong, 2007. "A Richer Understanding of Australia’s Productivity Performance in the 1990s: Improved estimates based upon firm-level panel data," CEPR Discussion Papers 545, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
    Other versions:
  12. Hugo Rojas-Romagosa, 2006. "Productivity Effects of FDI Inflows: A Literature Review," CPB Memoranda 170, CPB Netherlands Bureau for Economic Policy Analysis. [Downloadable!]
  13. José Luis Iparraguirre D’Elia, 2008. "Essays on Labour Productivity in Northern Ireland," Selected Research Papers ERINI 2008_essays_productivity, Economic Research Institute of Northern Ireland. [Downloadable!]
  14. Karpaty, Patrik, 2004. "Are foreign owned firms more productive? Evidence from Swedish firm data," Working Papers 2004:6, Örebro University, Swedish Business School. [Downloadable!]
  15. Michael P Devereux, 2008. "Taxation of Outbound Direct Investment: Economic Principles and Tax Policy Considerations," Working Papers 0824, Oxford University Centre for Business Taxation. [Downloadable!]
  16. Baldwin, John R. & Gu, Wulong, 2005. "Global Links: Multinationals, Foreign Ownership and Productivity Growth in Canadian Manufacturing," The Canadian Economy in Transition 2005009e, Statistics Canada, Micro economic Studies and Analysis Division. [Downloadable!]
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