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Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance

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  • Laura Alfaro
  • Maggie Chen

Abstract

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.

Suggested Citation

  • Laura Alfaro & Maggie Chen, 2011. "Surviving the Global Financial Crisis: Foreign Ownership and Establishment Performance," NBER Working Papers 17141, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:17141
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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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