Estimating Direct and Indirect Effects of Foreign Direct Investment on Firm Productivity in the Presence of Interactions between Firms
By Sourafel Girma, Yundan Gong, Holger Görg, Sandra Lancheros. Social Science Research Network, 2014
123 citations recorded by the source corpus.
We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.
Subfields: Economics and Econometrics, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/62233a5b436e99036a1e5c91920bd8bc781da4bd
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In Economics and Econometrics
In Strategy and Management
Citations in the corpus
- Acquisitions, markups, efficiency, and product quality: Evidence from India (2018, background): “…has shown that there is evidence that domestic firms can be affected by the presence of foreign investors due to technology spillovers or competitive effects (e.g., Girma et al., 2015; Haskel et al., 2007; Javorcik, 2004) and that these spillovers are most likely to occur within the same region.”