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Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance

  • Laura Alfaro
  • Maggie Chen

We examine the differential response of establishments to the recent global financial crisis with particular emphasis on the role of foreign ownership. Using a worldwide establishment panel dataset, we investigate how multinational subsidiaries around the world responded to the crisis relative to local establishments. We find that, first, multinational subsidiaries fared on average better than local counterfactuals with similar economic characteristics. Second, among multinational subsidiaries, establishments sharing stronger vertical production and financial linkages with parents exhibited greater resilience. Finally, in contrast to the crisis period, the effect of foreign ownership and linkages on establishment performance was insignificant in non-crisis years.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17141.

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Date of creation: Jun 2011
Date of revision:
Publication status: published as Laura Alfaro & Maggie Xiaoyang Chen, 2012. "Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 30-55, August.
Handle: RePEc:nbr:nberwo:17141
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