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Labour Productivity and Foreign Direct Investment in Irish Manufacturing Industry: A Decomposition Analysis

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  • Frances Ruane
  • Ali Ugur

Abstract

Overall labour productivity in the Irish manufacturing sector increased by 158 per cent between 1991 and 1999. This growth in labour productivity coincided with strong growth in employment during the same period, in stark contrast to the experience of other European countries. This paper examines the components of this labour productivity growth in the period 1991-1999, using a decomposition analysis based on plant level data. In order to account for the large presence of foreign plants we carry out our analysis separately for foreign and domestic plants, as well as for four ownership subgroups, four sectoral subgroups, and two time sub-periods. Our results show that although the main drivers of average labour productivity growth in all groups arise within plant and from plant entry, there are marked differences in the relative sizes of these effects across the ownership/sector/time-period.

Suggested Citation

  • Frances Ruane & Ali Ugur, 2005. "Labour Productivity and Foreign Direct Investment in Irish Manufacturing Industry: A Decomposition Analysis," The Institute for International Integration Studies Discussion Paper Series iiisdp027, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp027
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    References listed on IDEAS

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    1. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, July.
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    6. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    7. John Haltiwanger, 1997. "Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence," Review, Federal Reserve Bank of St. Louis, issue May, pages 55-78.
    8. Frances Ruane & Holger Görg, 1997. "The Impact of Foreign Direct Investment on Sectoral Adjustment in the Irish Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 160(1), pages 76-86, April.
    9. repec:sae:niesru:v:160:y::i:1:p:76-86 is not listed on IDEAS
    10. Baldwin, John R., 1996. "Productivity Growth, Plant Turnover and Restructuring in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1995087e, Statistics Canada, Analytical Studies Branch.
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    Cited by:

    1. Godart, Olivier & Görg, Holger & Hanley, Aoife, 2011. "Surviving the Crisis: Foreign Multinationals vs Domestic Firms in Ireland," IZA Discussion Papers 5882, Institute of Labor Economics (IZA).
    2. Salvador Barrios & Holger Görg & Eric Strobl, 2016. "Spillovers through backward linkages from multinationals: Measurement matters!," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT, chapter 11, pages 213-226, World Scientific Publishing Co. Pte. Ltd..
    3. Carol Newman, 2006. "The impact of globalisation and trade on the productivity performance of the Irish food manufacturing sector," The Institute for International Integration Studies Discussion Paper Series iiisdp180, IIIS.
    4. Martina Lawless & J. Peter Neary & Zuzanna Studnicka, 2019. "South-North Trade in Ireland: Gravity and Firms from the Good Friday Agreement to Brexit," The Economic and Social Review, Economic and Social Studies, vol. 50(4), pages 751-766.
    5. Godart, Olivier & Görg, Holger & Hanley, Aoife, 2011. "Surviving the crisis: Foreign multinationals vs domestic firms," Kiel Working Papers 1700, Kiel Institute for the World Economy (IfW).

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