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Multinationals and Plant Exit: Evidence from Chile

Author

Listed:
  • Alvarez, Roberto

    () (Central Bank of Chile)

  • Görg, Holger

    () (Kiel Institute for the World Economy)

Abstract

This paper examines the link between multinational enterprises and plant exit in Chile. We investigate three main questions: are affiliates of foreign multinationals more likely to exit than domestic firms? Does the exit probability of multinationals depend on its export orientation?, and Does the presence of multinationals affect the survival of other firms in the economy? Our results show that foreign plants are more likely to exit the economy, controlling for other firm and industry characteristics, only during the late 1990s, a period when the Chilean economy experience a massive slowdown. Our data also suggest that only domestic market oriented multinationals responded to this negative shock by being more "footloose"; this is not true for multinational exporters. We also find that the presence of multinationals has a positive effect on plant survival in the early 1990s. This positive effect, however, is fully captured by productivity, once controlling for TFP in our exit regressions we do not find any further impact of multinational presence on a plant’s probability of exit.

Suggested Citation

  • Alvarez, Roberto & Görg, Holger, 2005. "Multinationals and Plant Exit: Evidence from Chile," IZA Discussion Papers 1611, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1611
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    References listed on IDEAS

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    More about this item

    Keywords

    exporting; multinationals; foreign direct investment; survival; exit;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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