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Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels

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Listed:
  • Eric Ramstetter

Abstract

This paper uses micro data and published compilations of micro data to estimate shares of multinational corporations (MNCs) in Southeast Asian manufacturing. It first shows that MNC shares tended to be largest in Singapore, intermediate in Malaysia and (recently) in Vietnam, and lowest in Thailand and Indonesia. Shares tended to decline in Singapore and Thailand, were relatively constant in Malaysia, and increased in Indonesia and Vietnam. Shares of majority foreign MNCs also increased conspicuously in Indonesia and Thailand as MNCs bought out local partners in joint ventures after the Asian crisis. Second, it highlights how MNC shares were always lowest in terms of the number of plants or establishments, or in other words, how MNCs tended to be larger on average than local firms or plants. MNCs also tended to account for larger shares of production than employment, and even larger shares of exports. Hence MNCs tended to have relatively high labor productivity and export propensities. Because these simple comparisons do not account for other influences on productivity, wages, or exporting, for example, the paper also describes how micro-data have been used to analyze productivity, wages, and export propensities. This literature suggests that productivity differentials were generally positive but often statistically insignificant, especially at the industry level. Wage differentials were also positive and more often significant, but the largest and most consistent differentials are observed in export propensities. Third, the paper also reviewed literature suggesting positive productivity and wage spillovers in Indonesia, Thailand, and to some extent Vietnam. However, such analyses need to be treated with caution because unwarranted pooling across manufacturing industries is common and has the well-known potential to bias estimates. In addition, the paper emphasized that balanced panels can create important sampling biases because of large turnover that is particularly conspicuous among small non-MNCs in this dynamic region.

Suggested Citation

  • Eric Ramstetter, 2009. "Firm- and Plant-level Analysis of Multinationals in Southeast Asia: the Perils of Pooling Industries and Balancing Panels," Global COE Hi-Stat Discussion Paper Series gd09-106, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd09-106
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-106.pdf
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    References listed on IDEAS

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    1. Nguyen, Anh Ngoc & Nguyen, Thang & Le, Dang Trung & Pham, Quang Ngoc & Nguyen, Dinh Chuc & Nguyen, Duc Nhat, 2008. "Foreign direct investment in Vietnam: Is there any evidence of technological spillover effects," MPRA Paper 7273, University Library of Munich, Germany.
    2. Sjoholm, Fredrik & Lipsey, Robert E, 2006. "Foreign Firms and Indonesian Manufacturing Wages: An Analysis with Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 201-221, October.
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    8. Robert Lipsey & Fredrik Sjöholm, 2004. "FDI and wage spillovers in Indonesian manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(2), pages 321-332, June.
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    Citations

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    Cited by:

    1. Thanapol Srithanpong, 2016. "Firm Productivity in Thai Manufacturing Industries: Evidence from Firm-level Panel Data," PIER Discussion Papers 15., Puey Ungphakorn Institute for Economic Research, revised Jan 2016.
    2. Sjöholm, Fredrik, 2016. "Foreign Direct Investment and Value Added in Indonesia," Working Papers 2016:31, Lund University, Department of Economics.
    3. Sjöholm, Fredrik, 2013. "Foreign Direct Investments in Southeast Asia," Working Papers 2013:37, Lund University, Department of Economics.

    More about this item

    Keywords

    micro data; manufacturing; Southeast Asia; multinational corporations;

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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