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Suppliers of Multinationals and the Forced Linkage Effect: Evidence from Firm Level Data

  • Olivier N. Godart
  • Holger Görg

Using information on more than 1000 firms in a number of emerging countries, we find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide first empirical support for a “forced linkage effect” from supplying multinational companies. Our findings hold controlling for other factors within and outside the supplier- customer relationship and when endogeneity concerns are taken into consideration

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File URL: https://www.ifw-members.ifw-kiel.de/publications/suppliers-of-multinationals-and-the-forced-linkage-effect-evidence-from-firm-level-data/KWP_1822.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1822.

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Length: 31 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:kie:kieliw:1822
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  1. Beata S. Javorcik & Mariana Spatareanu, 2009. "Tough Love: Do Czech Suppliers Learn from their Relationships with Multinationals?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 811-833, December.
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  8. Smarzynska, Beata K., 2002. "Does foreign direct investment increase the productivity of domestic firms : in search of spillovers through backward linkages," Policy Research Working Paper Series 2923, The World Bank.
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  11. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," CEPR Discussion Papers 1365, C.E.P.R. Discussion Papers.
  12. Gene M. Grossman & Elhanan Helpman, 2002. "Integration versus Outsourcing in Industry Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 85-120.
  13. Pol Antràs, 2003. "Firms, Contracts, and Trade Structure," NBER Working Papers 9740, National Bureau of Economic Research, Inc.
  14. Pol Antras & Elhanan Helpman, 2003. "Global Sourcing," Harvard Institute of Economic Research Working Papers 2005, Harvard - Institute of Economic Research.
  15. Keller, Wolfgang & Yeaple, Stephen R., 2004. "Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States," Kiel Working Papers 1249, Kiel Institute for the World Economy (IfW).
  16. Horn, H. & Lang, H. & Lundgren, S., 1991. "Managerial Effort Incentives, X-Inefficiency and International Trade," Papers 507, Stockholm - International Economic Studies.
  17. Beata S. Javorcik, 2008. "Can Survey Evidence Shed Light on Spillovers from Foreign Direct Investment?," World Bank Research Observer, World Bank Group, vol. 23(2), pages 139-159, June.
  18. Barrios, Salvador & Görg, Holger & Strobl, Eric, 2011. "Spillovers through backward linkages from multinationals: Measurement matters!," European Economic Review, Elsevier, vol. 55(6), pages 862-875, August.
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  27. repec:hrv:faseco:4784029 is not listed on IDEAS
  28. Kaufman, Daniel & Shang-Jin Wei, 1999. "Does"grease money"speed up the wheels of commerce?," Policy Research Working Paper Series 2254, The World Bank.
  29. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
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