Are Foreign Firms More Productive and Export- and Technology-intensive than Local Firms in Kenyan Manufacturing?
This paper uses the technological capabilities framework for examining differences in technological intensities and economic performance between foreign and local food and beverage, and textile and garment firms and metal engineering firms in Kenya. Foreign firms had statistically significant higher labour productivity means than local firms in textile and garment manufacturing. Foreign firms were also more export- and technology-intensive than local firms in textile and garment (process technology and R&D) and metal engineering (HR). Foreign firms had higher and statistically significant skills and overall technology (TI) means than local firms in food and beverages. The econometric exercise showed that foreign ownership had a statistically significant and positive relationship with overall technological and HR intensities. In labour productivity, the coefficient of TI was higher in the foreign firms' sample than in the local firms' sample. Local firms had higher value added in domestic than export markets. Export intensity had a positive relationship in the process technology regressions, but an inverse relationship in the HR regressions in the foreign firms' sample. Overall, the statistically significant results suggest that foreign firms' technology, productivity and export intensity levels in economies with weak institutions tend to be superior to local firms.
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Volume (Year): 33 (2005)
Issue (Month): 2 ()
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