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Foreign Plants and Industry Productivity: Evidence from Chile

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  • Natalia Ramondo

Abstract

This paper presents new evidence on foreign plants and their effects on a host industry. I test the predictions of a Melitz‐type model using a panel of domestic and foreign plants in the Chilean manufacturing sector. Foreign ownership is a strong predictor of plant productivity and size advantages. Moreover, productivity gains for a domestic incumbent are positively associated with foreign plants' presence in the same industry and region. I also find a positive correlation between foreign entry and exit of less productive domestic plants, but inconclusive evidence on the effects on productivity of new domestic plants.

Suggested Citation

  • Natalia Ramondo, 2009. "Foreign Plants and Industry Productivity: Evidence from Chile," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 789-809, December.
    • Handle: RePEc:bla:scandj:v:111:y:2009:i:4:p:789-809
    DOI: 10.1111/j.1467-9442.2009.01583.x
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