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Characterizing Euro Area Multinationals

  • Ingo Geishecker
  • Holger Görg
  • Daria Taglioni

This study uses firm-level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms' productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over-proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1413.

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Length: 30 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:kie:kieliw:1413
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  1. John Haltiwanger & C J Krizan & Lucia Foster, 1998. "Aggregate Productivity Growth: Lessons From Microeconomic Evidence," Working Papers 98-12, Center for Economic Studies, U.S. Census Bureau.
  2. Hennart, J.M.A., 2007. "The theoretical rationale for a multinationality - performance relationship," Other publications TiSEM b4c7bdd4-bfda-467f-9886-3, Tilburg University, School of Economics and Management.
  3. G–rg, Holger & Eric Strobl, 2002. ""Footloose" Multinationals?," Royal Economic Society Annual Conference 2002 89, Royal Economic Society.
  4. J. Bradford Jensen & Andrew Bernard, 2005. "Firm Structure, Multinationals, and Manufacturing Plant Deaths," Working Papers 05-18, Center for Economic Studies, U.S. Census Bureau.
  5. Helpman, Elhanan & Melitz, Marc J & Yeaple, Stephen R, 2003. "Export versus FDI," CEPR Discussion Papers 3741, C.E.P.R. Discussion Papers.
  6. Girma, Sourafel & Gorg, Holger & Strobl, Eric, 2004. "Exports, international investment, and plant performance: evidence from a non-parametric test," Economics Letters, Elsevier, vol. 83(3), pages 317-324, June.
  7. Arnold, Jens Matthias & Hussinger, Katrin, 2005. "Exports versus FDI in German Manufacturing: Firm Performance and Participation in International Markets," ZEW Discussion Papers 05-73, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  8. Greenaway, David & Kneller, Richard, 2008. "Exporting, productivity and agglomeration," European Economic Review, Elsevier, vol. 52(5), pages 919-939, July.
  9. Delgado, Miguel A. & Farinas, Jose C. & Ruano, Sonia, 2002. "Firm productivity and export markets: a non-parametric approach," Journal of International Economics, Elsevier, vol. 57(2), pages 397-422, August.
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