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Global Links: Multinationals, Foreign Ownership and Productivity Growth in Canadian Manufacturing

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  • Baldwin, John R. Gu, Wulong

Abstract

This paper examines two potential benefits of foreign-controlled plants in the Canadian manufacturing sector: the superior performance of foreign-controlled plants and their productivity spillovers to domestic plants. The paper finds that foreign-controlled plants are more productive, more innovative, more technology intensive, pay higher wages and use more skilled workers. This foreign-ownership advantage is found to be a multinational advantage. What matters for economic performance is whether plants belong to multinational enterprises (MNEs) rather than ownership per se. Canadian multinationals are as productive as foreign multinationals. We also find that MNEs have accounted for a disproportionately large share of productivity growth in the last two decades. Finally, we find robust evidence for productivity spillovers from foreign-controlled plants to domestic-controlled plants arising from increased competition and greater use of new technologies among domestic plants.

Suggested Citation

  • Baldwin, John R. Gu, Wulong, 2005. "Global Links: Multinationals, Foreign Ownership and Productivity Growth in Canadian Manufacturing," The Canadian Economy in Transition 2005009e, Statistics Canada, Economic Analysis Division.
  • Handle: RePEc:stc:stcp1e:2005009e
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    References listed on IDEAS

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    Cited by:

    1. A. E. Safarian, 2015. "Simplifying the Rule Book: a Proposal to Reform and Clarify Canada’s Policy on Inward Foreign Direct Investment," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 425, May.
    2. Mérette, Marcel & Georges, Patrick & Dissou, Yazid, 2008. "Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis," Conference papers 331743, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Feinberg, Susan & Keane, Michael, 2009. "The Offshoring Strategies of US Multinational Corporations Operating in Canada," MPRA Paper 55181, University Library of Munich, Germany.
    4. Peter Nicholson, 2009. "Innovation and Business Strategy: Why Canada Falls Short," International Productivity Monitor, Centre for the Study of Living Standards, vol. 18, pages 51-71, Spring.
    5. Liu, Huju & Tang, Jianmin, 2017. "Age-productivity profiles of entrants and exits: evidence from Canadian manufacturing," Structural Change and Economic Dynamics, Elsevier, vol. 40(C), pages 26-36.
    6. Lileeva, Alla, 2006. "Global Links: The Benefits to Domestically-controlled Plants from Inward Direct Investment - The Role of Vertical Linkages," The Canadian Economy in Transition 2006010e, Statistics Canada, Economic Analysis Division.
    7. Yanling Wang, 2013. "Foreign Acquisition, Domestic Acquisition and Plant Survival," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(3), pages 307-324, November.
    8. Jaan Masso & Tõnu Roolaht & Urmas Varblane, 2010. "Foreign Direct Investment And Innovation In Central And Eastern Europe: Evidence From Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 67, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    9. Baldwin, John R. Gellatly, Guy, 2007. "Global Links: Multinationals in Canada: An Overview of Research at Statistics Canada," The Canadian Economy in Transition 2007014e, Statistics Canada, Economic Analysis Division.
    10. John R. Baldwin & W. Mark Brown & David L. Rigby, 2010. "Agglomeration Economies: Microdata Panel Estimates From Canadian Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 50(5), pages 915-934, December.
    11. A. Edward Safarian, 2011. "International Mergers and Acquisitions," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 6, Edward Elgar Publishing.
    12. John Baldwin & Yanling Wang, 2011. "Plant Size, Nationality, and Ownership Change," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(3), pages 351-380, November.
    13. Alla Lileeva, 2010. "The benefits to domestically owned plants from inward direct investment: the role of vertical linkages," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(2), pages 574-603, May.
    14. Jagannath Mallick, 2015. "Globalisation, Structural Change and Labour Productivity Growth in BRICS Economy," FIW Working Paper series 141, FIW.
    15. Mark Horridge & Glyn Wittwer, 2008. "Creating and managing an impossibly large CGE database that is up-to-date," Centre of Policy Studies/IMPACT Centre Working Papers g-175, Victoria University, Centre of Policy Studies/IMPACT Centre.
    16. Boothby, Daniel & Dufour, Anik & Tang, Jianmin, 2010. "Technology adoption, training and productivity performance," Research Policy, Elsevier, vol. 39(5), pages 650-661, June.
    17. Ghosh Madanmohan & Wang Weimin, 2010. "Does FDI Accelerate Economic Growth? The OECD Experience Based on Panel Data Estimates for the Period 1980-2004," Global Economy Journal, De Gruyter, vol. 9(4), pages 1-23, January.
    18. Yanling Wang, 2010. "FDI and productivity growth: the role of inter‐industry linkages," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(4), pages 1243-1272, November.
    19. Mallick, Jagannath, 2017. "Structural Change and Productivity Growth in India and the People’s Republic of China," ADBI Working Papers 656, Asian Development Bank Institute.
    20. David L. Rigby & W. Mark Brown, 2015. "Who Benefits from Agglomeration?," Regional Studies, Taylor & Francis Journals, vol. 49(1), pages 28-43, January.

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