Working Paper: CEPR ID: DP2868
Authors: Sophia Dimelis; Helen Louri
Abstract: This Paper analyses the production efficiency gains in terms of technology transfer and labour productivity changes caused by diverse degrees of foreign ownership. The analysis is based on a sample of 4056 domestic and foreign manufacturing firms operating in Greece in 1997. Departures from normality of labour productivity and its logarithm led to the adoption of the robust technique of quantile regression as providing a better view of the examined relationships by obtaining estimates at different quantiles. Interesting results include a positive and significant effect of foreign ownership on labour productivity which stems exclusively from full and majority owned affiliates and becomes significant only in the middle quantiles. Productivity spillovers benefiting local firms are also differentiated by degree of foreign ownership, with minority holdings exercising a stronger effect in most quantiles. Such distinct FDI effects stress the importance of policy modifications according to the level of development in the host economy, and the selected objectives.
Keywords: FDI; multinationals; productivity; spillovers
JEL Codes: F23; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| foreign ownership (F23) | productivity (O49) |
| majority foreign ownership (F23) | productivity (O49) |
| minority foreign ownership (F23) | productivity (O49) |
| foreign ownership (F23) | productivity spillovers (O49) |
| minority foreign holdings (F23) | productivity of lower productivity local firms (D22) |
| foreign ownership (F23) | enhanced production efficiency (E23) |
| financial constraints (H60) | firm efficiency levels (D22) |