Exit and Foreign Ownership: Evidence from Export-Oriented Firms in Sri Lanka

Daniel Stock (daniel_stock@hks.harvard.edu)
Additional contact information
Daniel Stock: Center for International Development at Harvard University

No 112a, CID Working Papers from Center for International Development at Harvard University

Abstract: While foreign direct investment may play a transformative role in the development of economies, foreign-owned firms are also said to be more “footloose” than comparable local firms. This paper uses a semi-parametric approach to examine the link between firm ownership and exit rates, tracking a set of export-oriented firms operating in Sri Lanka in years between 1978 and 2017. We find that foreign firms are in fact 42-56% more likely to exit than local firms, but only for their first years of existence. In their later years, foreign firms are actually less likely to exit than local firms, though this late advantage is not statistically significant when conditioned on the firms’ initial characteristics (such as employment size). This pattern supports the theory that foreign firms face a steeper early learning curve in adapting to local conditions.

Keywords: Foreign; Direct; Investment (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-int and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://growthlab.cid.harvard.edu/files/growthlab/ ... nka-export-firms.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cid:wpfacu:112a

Access Statistics for this paper

More papers in CID Working Papers from Center for International Development at Harvard University 79 John F. Kennedy Street. Contact information at EDIRC.
Bibliographic data for series maintained by Chuck McKenney (chuck_mckenney@hks.harvard.edu).