Multinational Firms and Productivity Catching-Up: The Case Of Chilean Manufacturing
In this paper we study total factor productivity (TFP) catching-up using 20 years of plant-level data for Chilean manufacturing. The paper addresses two key issues: First, we analyze whether there is evidence that low productivity plants experience larger TFP growth than those closer to the technology frontier. Second, we investigate the role of multinational plants in accelerating the catching-up process by non-frontier domestic plants. Our results show evidence of productivity catching-up, and that a higher presence of multinationals positively contributes to this phenomenon. There findings are consistent with the idea of technology spillovers from high to low productivity plants or that a higher presence of multinationals increase competitiveness and productivity in domestic markets.
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