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The Contribution of Foreign Affilliates to Productivity Growth: Evidence from OECD Countries

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  • Chiara Criscuolo

Abstract

This study uses new information to determine the role of foreign affiliates in productivity growth. The study has three aims. Firstly, the study quantifies the contribution of foreign affiliates to productivity growth in OECD countries using a growth accounting approach. Secondly, the analysis shows how much of this contribution derives from an increase in the employment share of foreign affiliates in the host country relative to an increase in the productivity of existing foreign affiliates. Thirdly, the study compares the presence of foreign affiliates across OECD countries. The information is derived by matching three OECD data sources: the STAN database for industrial analysis, the AFA (Activities of Foreign Affiliates) and FATS (Foreign Affiliates in Trade and Services) databases. Despite its limitations, this combined database provides longitudinal industry level information on both the presence and the productivity of foreign affiliates in OECD countries. The analysis confirms that foreign affiliates can make an important contribution to productivity growth. The contribution is larger in the manufacturing sector. In the services sector and in low-tech manufacturing sectors, the largest component of the contribution of foreign affiliates is due to the increased employment share of foreign affiliates. In medium- and high-tech sectors, the contribution is mainly driven by stronger productivity growth of existing foreign affiliates. In the United States the contribution is consistently driven by stronger productivity growth of existing foreign affiliates in both the manufacturing and the services sectors. La constribution des filiales étrangères à la croissance de la productivité : Observations concernant les pays de l'OCDE La présente étude utilise de nouvelles informations pour déterminer le rôle joué par les filiales étrangères dans la croissance de la productivité. L'analyse s'articule autour de trois axes. Premièrement, l'étude quantifie la contribution des filiales étrangères aux gains de productivité dans les pays de l'OCDE à partir d'une analyse causale de la croissance. Deuxièmement, l'analyse montre dans quelle mesure cette contribution résulte d'une augmentation du poids relatif des filiales étrangères dans l'emploi du pays hôte, ou de gains de productivité réalisés par les filiales étrangères existantes. Troisièmement, l'étude compare la présence des filiales étrangères dans différents pays de l'OCDE. Les informations utilisées sont obtenues par rapprochement de trois sources de données de l'OCDE : la base de données sur l'analyse structurelle (STAN), la base de données sur les activités des filiales étrangères (AFA) et la base de données sur les échanges de services des filiales étrangères (FATS). Malgré ses limites, l'ensemble de données ainsi constitué offre des informations longitudinales par secteur tant sur la présence que sur la productivité des filiales étrangères dans les pays de l'OCDE. L'analyse confirme que les filiales étrangères peuvent contribuer de manière importante à la croissance de la productivité. Cette contribution est plus forte dans le secteur manufacturier. Dans les services et dans les secteurs manufacturiers de basse technologie, la contribution des filiales étrangères est principalement imputable à l'augmentation de leur poids relatif dans l'emploi. Dans les secteurs de moyenne et haute technologie, cette contribution repose essentiellement sur une croissance plus forte de la productivité des filiales étrangères existantes. Aux États-Unis, cette contribution résulte systématiquement d'une croissance plus forte de la productivité des filiales étrangères existantes, tant dans le secteur manufacturier que dans les services.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Science, Technology and Industry Working Papers with number 2005/8.

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Date of creation: 30 Aug 2005
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Handle: RePEc:oec:stiaaa:2005/8-en

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Cited by:
  1. Paul Conway & Tatiana Lysenko & Geoff Barnard, 2009. "Product Market Regulation in Russia," OECD Economics Department Working Papers 742, OECD Publishing.

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