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Efficiency of Manufacturing in Russia: Effect of Domestic Competition and FDI

  • Bessonova, Eugenia


    (CEFIR, Moscow, Russia)

Registered author(s):

    In this paper we investigate the effect of the entry of foreign firms on the efficiency of Russian industrial enterprises using the panel firm level dataset for 1995-2004. The analysis of the competition structure of Russian industrial sectors reveals that domestic concentration ratios remain high at regional level. We find that foreign entry has positive effect on the productivity of most efficient domestic firms. The effect of foreign entry on productivity of inefficient firms is negative. Our findings show that positive effect from foreign competition appears to be restrained by barriers preventing exit of inefficient firms.

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    Article provided by Publishing House "SINERGIA PRESS" in its journal Applied Econometrics.

    Volume (Year): 17 (2010)
    Issue (Month): 1 ()
    Pages: 106-127

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    Handle: RePEc:ris:apltrx:0080
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    1. Damijan, Joze P. & Knell, Mark & Majcen, Boris & Rojec, Matija, 2003. "The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries," Economic Systems, Elsevier, vol. 27(2), pages 189-204, June.
    2. Bruno, Randolph Luca & Bytchkova, Maria & Estrin, Saul, 2008. "Institutional Determinants of New Firm Entry in Russia: A Cross Regional Analysis," IZA Discussion Papers 3724, Institute for the Study of Labor (IZA).
    3. Irina Tytell & Ksenia Yudaeva, 2005. "The Role of FDI in Eastern Europe and New Independent States: New Channels for the Spillover Effect," Working Papers w0060, Center for Economic and Financial Research (CEFIR).
    4. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 701-728, May.
    5. Annette Brown & J. David Brown, 1998. "Does Market Structure Matter?: New Evidence From Russia," William Davidson Institute Working Papers Series 159, William Davidson Institute at the University of Michigan.
    6. Jože P. Damijan & José de Sousa & Olivier Lamotte, 2009. "Does international openness affect the productivity of local firms?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(3), pages 559-586, 07.
    7. Bessonova, Eugenia, 2007. "An Estimation of the Production Efficiency of Russian Industrial Firms," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 6(2), pages 13-35.
    8. B. Merlevede & K. Schoors, 2006. "FDI and the Consequences Towards more complete capture of spillover effects," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/372, Ghent University, Faculty of Economics and Business Administration.
    9. Jozef Konings, 2000. "The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," William Davidson Institute Working Papers Series 344, William Davidson Institute at the University of Michigan.
    10. Joze P. Damijan & Jose de Sousa & Olivier Lamotte, 2008. "Does international openness affect productivity of local firms? Evidence from Southeastern Europe," LICOS Discussion Papers 21908, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    11. Philippe Aghion & Evguenia Bessonova, 2006. "On Entry and Growth: Theory and Evidence," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 259-278.
    12. van de Klundert, Theo & Smulders, Sjak, 1997. " Growth, Competition and Welfare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 99-118, March.
    13. Djankov, Simeon & Hoekman, Bernard, 1999. "Foreign investment and productivity growth in Czech enterprises," Policy Research Working Paper Series 2115, The World Bank.
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