Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam

Tidiane Kinda

MPRA Paper from University Library of Munich, Germany

Abstract: Using a one-step stochastic frontier model for five developing countries (Brazil, Morocco, Pakistan, South Africa, and Vietnam), we show that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. Unlike former studies, this paper uses the share of each firm’s sales to multinationals located in the country to assess the importance of vertical spillovers, and it controls for the direct impact of the investment climate on efficiency. The results show that firms (particularly small local firms) that sell more of their production to multinationals are more efficient.

Keywords: Foreign ownership; firm-level efficiency; vertical spillovers; investment climate; developing countries (search for similar items in EconPapers)
JEL-codes: D24 F21 F23 O14 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-afr, nep-ara, nep-cwa, nep-dev and nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19160

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