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Foreign Ownership and Economic Performance in Italy: Not all is Cherry-Picking!

Author

Listed:
  • Rosario Crinò

    (Università degli Studi di Milano and CESPRI - Bocconi University, Milan, Italy.)

  • Fabrizio Onida

    (CESPRI, Bocconi University, Milan, Italy.)

Abstract

This paper studies the effects of foreign participation on economic performance in Lombardy, a Northern Italian region accounting for more than 40% of Foreign Direct Investment inflows in Italy. We employ a large database consisting of balance sheet and foreign ownership information for more than 13,000 firms and analyze different dimensions of economic performance: capital and knowledge-intensity, productivity, wages, returns to investments and financial structure. We find that foreign multinationals are more knowledge-intensive, more productive, pay higher wages and show a more solid financial structure than national firms; at the same time, foreign multinationals show lower returns to investments. Propensity score estimation results show that this difference implies a true effect from foreign participation in the manufacturing sector; in the services sector, instead, the difference in favour of multinationals is mostly accounted for by a differential pattern of industry location between the two types of firms, by the larger size of multinationals and by the likely tendency of the latter to invest in already high-performing national firms.

Suggested Citation

  • Rosario Crinò & Fabrizio Onida, 2007. "Foreign Ownership and Economic Performance in Italy: Not all is Cherry-Picking!," KITeS Working Papers 207, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Nov 2007.
    • Handle: RePEc:cri:cespri:wp207
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    File URL: ftp://ftp.unibocconi.it/pub/RePEc/cri/papers/WP207CrinoOnida.pdf
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    Citations

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    Cited by:

    1. Mariachiara Barzotto & Giancarlo Cor? & Ilaria Mariotti, 2017. "Apertura internazionale e capitale territoriale: gli investimenti esteri come nuovo fattore di crescita dei distretti industriali," ECONOMIA E SOCIET? REGIONALE, FrancoAngeli Editore, vol. 2017(2), pages 65-75.
    2. Chiara Bentivogli & Litterio Mirenda, 2017. "Foreign ownership and performance: evidence from a panel of Italian firms," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Uses of central balance sheet data offices' information, volume 45, Bank for International Settlements.
    3. Mariachiara Barzotto & Giancarlo Corò & Ilaria Mariotti & Marco Mutinelli, 2016. "The impact of Inward FDI on host country labour markets. A counterfactual analysis on Italian manufacturing companies," Working Papers 1612, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
    4. Mariachiara Barzotto & Giancarlo Corò & Ilaria Mariotti & Marco Mutinelli, 2019. "Ownership and workforce composition: a counterfactual analysis of foreign multinationals and Italian uni-national firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 46(4), pages 581-607, December.

    More about this item

    Keywords

    Multinational Firms; Performance Indicators; Propensity Score Estimation;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

    NEP fields

    This paper has been announced in the following NEP Reports:

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