Turnover, Ownership and Productivity in Malaysian Manufacturing

Ergun Dogan, Koi Wong and Michael Meow-Chung Yap

No 13-10, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Applying Foster, Haltiwanger and Krizan‟s (1998) decomposition of productivity growth method to Malaysian manufacturing census data for 2000 and 2005, we analyse if firm turnover by ownership (domestic versus foreign) has any impact on the sector‟s aggregate productivity growth. The findings show that turnover matters regardless of ownership but, more importantly, attracting foreign direct investment inflows could induce positive „net entry effect‟. The manufacturing sector‟s heavy dependence on FDI is underscored by the significant contribution of large MNCs to export value. Foreign entrants also have an important positive impact on sector productivity. The analysis shows that large-sized foreign and domestic entrants are more productive than medium-sized and especially small-sized ones. Among survivors, large foreign and domestic establishments fare the worst. Mediumsized domestic survivors, on the other hand, contribute the most to boosting sector productivity. The study demonstrates the usefulness of such an analytical framework by drawing out important implications for state industrial policies based on ownership and firm size.

Keywords: Ownership, firm turnover; productivity; manufacturing; Malaysia (search for similar items in EconPapers)
JEL-codes: D24 F14 L60 O12 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2010-05
New Economics Papers: this item is included in nep-eff, nep-ent and nep-sea
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Journal Article: Turnover, ownership and productivity in Malaysian manufacturing (2013)
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