Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/197884 
Year of Publication: 
2018
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2018-31
Publisher: 
Bank of Canada, Ottawa
Abstract: 
This paper seeks to understand how outward foreign direct investment (FDI) affects the productivity of Canadian firms. We estimate the impact of outward greenfield investment on measures of firm-level productivity using FDI data from roughly 2,000 Canadian firms and more than 4,000 outward FDI projects over the 2003-14 period. Combining matching techniques with a difference-in-difference approach, we find that firms that invest abroad tend to see more important productivity gains one to two years after the investment, compared with firms that are otherwise similar but remain domestic, suggesting that outward investment has beneficial implications for investing firms. Further, panel regression analysis at the provincial level shows that an increase in the number of outward investment projects is found to be associated with higher productivity growth, particularly for investments in OECD countries. The result suggests that learning or technological spillover effects are particularly important when investing in countries close to the home country's technological frontier.
Subjects: 
Firm dynamics
Productivity
JEL: 
D24
F21
F23
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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