Working Paper: CEPR ID: DP18100
Authors: Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen
Abstract: Despite competition concerns over the increasing dominance of global corporations,many argue that productivity spillovers from multinationals to domestic firms justify pro-FDI policies. For the first time, we use firm-to-firm transaction data in a developed countryto examine the impact of forming a new relationship with a multinational, and find a TFPincrease of about 8% three or more years after the event. Sales to other buyers, tradeand customer quality also increase. However, we also document that starting to supplyother “superstar firms” such as those who heavily export or are very large also increasesperformance by similar amounts, even if the superstar is a non-multinational. Placebos onstarting relationships with smaller firms and novel identification strategies relying solely ondemand shocks to superstar firms support a causal interpretation. A model of technologytransfer rationalizes these effects and also correctly predicts (i) falls in post-event markups;(ii) the type of firms who form superstar relationships and (iii) bigger treatment effectsfrom superstars intensive in R&D, IT and/or human capital. In addition to productivityspillovers, we document the transmission of “relationship capabilities” and “dating agency”effects as the increase in new buyers is particularly strong within the superstar firm’sexisting network. These results suggest an important role for raising productivity throughthe supply chains of superstar firms regardless of their multinational status.
Keywords: productivity; international spillovers
JEL Codes: F23; O30; F21
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| demand shocks to superstar firms (E39) | forming relationships with superstar firms (L14) |
| forming relationships with multinational firms (F23) | productivity increase (O49) |
| forming relationships with large domestic firms (L14) | productivity increase (O49) |
| superstar firms (L10) | productivity increase (O49) |