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Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam

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  • Kinda, Tidiane

Abstract

Using a one-step stochastic frontier model for five developing countries (Brazil, Morocco, Pakistan, South Africa, and Vietnam), we show that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. Unlike former studies, this paper uses the share of each firm’s sales to multinationals located in the country to assess the importance of vertical spillovers, and it controls for the direct impact of the investment climate on efficiency. The results show that firms (particularly small local firms) that sell more of their production to multinationals are more efficient.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 19160.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:19160

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Keywords: Foreign ownership; firm-level efficiency; vertical spillovers; investment climate; developing countries;

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Cited by:
  1. Combes, Jean-Louis & Kinda, Tidiane & Plane, Patrick, 2012. "Capital flows, exchange rate flexibility, and the real exchange rate," Journal of Macroeconomics, Elsevier, vol. 34(4), pages 1034-1043.

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