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Global Links: Multinationals, Foreign Ownership and Productivity Growth in Canadian Manufacturing

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Author Info

  • Baldwin, John R. Gu, Wulong

Abstract

This paper examines two potential benefits of foreign-controlled plants in the Canadian manufacturing sector: the superior performance of foreign-controlled plants and their productivity spillovers to domestic plants. The paper finds that foreign-controlled plants are more productive, more innovative, more technology intensive, pay higher wages and use more skilled workers. This foreign-ownership advantage is found to be a multinational advantage. What matters for economic performance is whether plants belong to multinational enterprises (MNEs) rather than ownership per se. Canadian multinationals are as productive as foreign multinationals. We also find that MNEs have accounted for a disproportionately large share of productivity growth in the last two decades. Finally, we find robust evidence for productivity spillovers from foreign-controlled plants to domestic-controlled plants arising from increased competition and greater use of new technologies among domestic plants.

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File URL: http://www5.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11-622-M2005009&lang=eng
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Bibliographic Info

Paper provided by Statistics Canada, Economic Analysis Division in its series The Canadian Economy in Transition with number 2005009e.

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Date of creation: 05 Dec 2005
Date of revision:
Handle: RePEc:stc:stcp1e:2005009e

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Web page: http://www.statcan.gc.ca
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Related research

Keywords: Manufacturing; Business performance and ownership; Business ownership;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Baldwin, John R. Gu, Wulong, 2004. "Industrial Competition, Shifts in Market Share and Productivity Growth," Economic Analysis (EA) Research Paper Series 2004021e, Statistics Canada, Analytical Studies Branch.
  2. Salvador Barrios & Eric Strobl, 2002. "Foreign direct investment and productivity spillovers: Evidence from the Spanish experience," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(3), pages 459-481, September.
  3. Chiara Criscuolo & Ralf Martin, 2005. "Multinationals and US Productivity Leadership: Evidence from Great Britain," CEP Discussion Papers dp0672, Centre for Economic Performance, LSE.
  4. Baldwin,John R. & Hanel,Petr, 2003. "Innovation and Knowledge Creation in an Open Economy," Cambridge Books, Cambridge University Press, number 9780521810869, November.
  5. Rachel Griffith & Stephen Redding & Helen Simpson, 2004. "Foreign Ownership and Productivity: New Evidence from the Service Sector and the R&D Lab," LSE Research Online Documents on Economics 3699, London School of Economics and Political Science, LSE Library.
  6. Steven Globerman & John C. Ries & Ilan Vertinsky, 1994. "The Economic Performance of Foreign Affiliates in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 143-56, February.
  7. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth. Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372 National Bureau of Economic Research, Inc.
  8. Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
  9. Aitken, Brian & Harrison, Ann & DEC, 1994. "Do domestic firms benefit from foreign direct investment? Evidence from panel data," Policy Research Working Paper Series 1248, The World Bank.
  10. Jeffrey I. Bernstein & Richard G. Harris & Andrew Sharpe, 2002. "The Widening Canada-US Productivity Gap in Manufaturing," International Productivity Monitor, Centre for the Study of Living Standards, vol. 5, pages 3-22, Fall.
  11. Rachel Griffith & Stephen Redding & Helen Simpson, 2003. "Productivity convergence and foreign ownership at the establishment level," LSE Research Online Documents on Economics 3666, London School of Economics and Political Science, LSE Library.
  12. Baldwin, John R. Gellatly, Guy, 2005. "Global Links: Long-term Trends in Foreign Investment and Foreign Control in Canada, 1960 to 2000," The Canadian Economy in Transition 2005008e, Statistics Canada, Economic Analysis Division.
  13. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," Working Papers 452, Queen Mary, University of London, School of Economics and Finance.
  14. Baldwin, John R. Gu, Wulong, 2003. "Plant Turnover and Productivity Growth in Canadian Manufacturing," Analytical Studies Branch Research Paper Series 2003193e, Statistics Canada, Analytical Studies Branch.
  15. John R. Baldwin & David Sabourin, 2002. "Impact of the Adoption of Advanced Information and Communication Technologies on Firm Performance in the Canadian Manufacturing Sector," OECD Science, Technology and Industry Working Papers 2002/1, OECD Publishing.
  16. Steven Globerman, 1979. "Foreign Direct Investment and `Spillover' Efficiency Benefits in Canadian Manufacturing Industries," Canadian Journal of Economics, Canadian Economics Association, vol. 12(1), pages 42-56, February.
  17. Alla Lileeva, 2010. "The benefits to domestically owned plants from inward direct investment: the role of vertical linkages," Canadian Journal of Economics, Canadian Economics Association, vol. 43(2), pages 574-603, May.
  18. Sylos Labini,Paolo, 2001. "Underdevelopment," Cambridge Books, Cambridge University Press, number 9780521588690, November.
  19. Baldwin, John R. Gu, Wulong, 2004. "Innovation, Survival and Performance of Canadian Manufacturing Plants," Economic Analysis (EA) Research Paper Series 2004022e, Statistics Canada, Analytical Studies Branch.
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Citations

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Cited by:
  1. Masso, Jaan & Roolaht, Tõnu & Varblane, Urmas, 2010. "Foreign direct investment and innovation in Central and eastern Europe : evidence from Estonia," Bank of Estonia Working Papers wp2010-05, Bank of Estonia, revised 14 Apr 2010.
  2. Baldwin, John R. Brown, W. Mark Rigby, David, 2008. "Agglomeration Economies: Microdata Panel Estimates from Canadian Manufacturing," Economic Analysis (EA) Research Paper Series 2008049e, Statistics Canada, Analytical Studies Branch.
  3. Peter Nicholson, 2009. "Innovation and Business Strategy: Why Canada Falls Short," International Productivity Monitor, Centre for the Study of Living Standards, vol. 18, pages 51-71, Spring.
  4. Lileeva, Alla, 2006. "Global Links: The Benefits to Domestically-controlled Plants from Inward Direct Investment - The Role of Vertical Linkages," The Canadian Economy in Transition 2006010e, Statistics Canada, Economic Analysis Division.

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