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Turnover, Ownership and Productivity in Malaysian Manufacturing

  • Ergun Dogan
  • Koi Nyen Wong
  • Michael Meow-Chung Yap

Applying Foster, Haltiwanger and Krizan‟s (1998) decomposition of productivity growth method to Malaysian manufacturing census data for 2000 and 2005, we analyse if firm turnover by ownership (domestic versus foreign) has any impact on the sector‟s aggregate productivity growth. The findings show that turnover matters regardless of ownership but, more importantly, attracting foreign direct investment inflows could induce positive „net entry effect‟. The manufacturing sector‟s heavy dependence on FDI is underscored by the significant contribution of large MNCs to export value. Foreign entrants also have an important positive impact on sector productivity. The analysis shows that large-sized foreign and domestic entrants are more productive than medium-sized and especially small-sized ones. Among survivors, large foreign and domestic establishments fare the worst. Mediumsized domestic survivors, on the other hand, contribute the most to boosting sector productivity. The study demonstrates the usefulness of such an analytical framework by drawing out important implications for state industrial policies based on ownership and firm size.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2010/1310turnoverdoganwongyap.pdf
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Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 13-10.

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Length: 40 pages
Date of creation: May 2010
Date of revision:
Handle: RePEc:mos:moswps:2010-13
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  1. Barbara M. Roberts & Steve Thompson, 2005. "Firm Turnover, Restructuring and Labour Productivity in Transition: The Case of Poland," Discussion Papers in Economics 05/27, Department of Economics, University of Leicester.
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