Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam

Kinda, Tidiane (2009): Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam.

Abstract

Using a one-step stochastic frontier model for five developing countries (Brazil, Morocco, Pakistan, South Africa, and Vietnam), we show that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. Unlike former studies, this paper uses the share of each firm’s sales to multinationals located in the country to assess the importance of vertical spillovers, and it controls for the direct impact of the investment climate on efficiency. The results show that firms (particularly small local firms) that sell more of their production to multinationals are more efficient.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign ownership, firm-level efficiency, vertical spillovers, investment climate, developing countries
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology

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