Do Foreign Firms Crowd Out Domestic Firms? Evidence from the Czech Republic

By R. Kosov. Review of Economics and Statistics, 2010

254 citations recorded by the source corpus.

I examine how foreign presence affects the growth and survival of domestic firms. Separating a negative crowding out and positive technology spillovers, I analyze whether the crowding out effect is dynamic, that is, domestic firms cut production over time as foreign firms grow, or a static effect realized on foreign entry into the industry. Using 19942001 firm-level Czech data, I find evidence of both technology spillovers and crowding out. However, crowding out is only short term; after initial entry shakeout, growing foreign sales increase domestic firm growth and survival, indicating domestic demand creation effect. However, I find no such benefits from domestic competition.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/fbf947ec3db166fca48292990e0da3db815deee3

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Citations in the corpus

When Does FDI Have Positive Spillovers? Evidence from 17 Transition Market Economies (2014, background): “Moran et al. (2005) as well as others argue that a country with better intellectual property rights (IPRs) and more openness to market competition and FDI attracts higher quality FDI because by being unconstrained the foreign firms optimize and bring in the latest technology.”
Dominant Logic and Entrepreneurial Firms‘ Performance in a Transition Economy (2010, background): “The other control variable was type of competition (in terms of local competitors versus local and foreign competitors— COMPETITION), because former studies found that the presence of foreign competitors strongly influences a firm’s behavior (Kosova, 2008).”
Impact of Firm Heterogeneity on Direct and Spillover Effects of FDI: Micro Evidence from Ten Transition Countries (2013, unknown): “Kosova (2006) tackles the problem by analyzing the effect of foreign firm presence on the growth and survival of domestic firms in the Czech Republic.”
Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In? (2016, background): “For example, Ndikumana and Verick (2008) analyze correlations between FDI and democracy and autocracy on the basis of data from Marshall and Jaggers (2009). These authors find a significant relation between democracy and domestic investment, but, because the coefficient is relatively small, Ndikuman”
Linkages and spillovers in global production networks: firm-level analysis of the Czech automotive industry (2016, background): “It also suggests that positive horizontal spillovers affected those domestic firms that survived the original restructuring of the 1990s (see also Kosova´, 2010).”
The Relationship Between Global Value Chains and Productivity (2017, background): “MNEs may also play an important role in propagation of shocks, with emerging evidence suggesting intra-firm trade exhibited greater volatility than arm's length trade during the recent economic crisis (Altomonte et al., 2012).”
Does FDI Facilitate Domestic Entry? Evidence from the Czech Republic (2010, unknown): “15 Firm ownership based on the ultimate owner is a more accurate description of the controlling owner than firm ownership identified by direct shareholdings (La Porta et al., 1999). 16 When we compared the ultimate ownership for firms that have an ultimate owner reported in each data version we use,”
Spillovers from Multinationals to Heterogeneous Domestic Firms: Evidence from Hungary (2009, unknown): “See Kosova (2006) for example for a study on the impact of FDI on exit of Czech firms.”
Spillovers and competition among foreign and local firms in China (2008, methodology): “Most studies, however, have used foreign employment shares to predict positive spillover effects (Caves, 1974; Driffield and Munday, 2000; Liu et al., 2000; Buckley et al., 2002; Kosova, 2005).”