Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103515
Authors: 
Girma, Sourafel
Gong, Yundan
Görg, Holger
Lancheros, Sandra
Year of Publication: 
2014
Series/Report no.: 
IZA Discussion Papers 8509
Abstract: 
We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.
Subjects: 
propensity score matching
SUTVA
foreign direct investment
interactions
JEL: 
F23
Document Type: 
Working Paper

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