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Evaluating the Causal Effect of Foreign Acquisition on Domestic Performances: The Case of Slovenian Manufacturing Firms

  • Sergio Salis

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    This paper investigates the impact of foreign acquisition in 1997 on the performances of a sample of Slovenian manufacturing firms. It uses the propensity score-matching estimation technique combined with the difference-in-differences approach to control for the potential bias arising from the non-random selection of acquired firms (endogeneity of foreign ownership). After confirming that foreign investors acquire the most productive firms in Slovenia, it shows that the productivity of such firms subsequently increases as a result of foreign takeover. This finding is consistent with the hypothesis that foreign firms transfer their technology to Slovenian affiliates.

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    File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp803.pdf
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    Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp803.

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    Length: pages
    Date of creation: 01 Jan 2006
    Date of revision:
    Handle: RePEc:wdi:papers:2006-803
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    8. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
    9. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
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    15. Caves, Richard E, 1974. "Multinational Firms, Competition, and Productivity in Host-Country Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 176-93, May.
    16. Haddad, Mona & Harrison, Ann, 1993. "Are there positive spillovers from direct foreign investment? : Evidence from panel data for Morocco," Journal of Development Economics, Elsevier, vol. 42(1), pages 51-74, October.
    17. Andrew B. Bernard & J. Bradford Jensen, 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," NBER Working Papers 6272, National Bureau of Economic Research, Inc.
    18. Blomstrom, Magnus & Persson, Hakan, 1983. "Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry," World Development, Elsevier, vol. 11(6), pages 493-501, June.
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