Global Links: The Benefits to Domestically-controlled Plants from Inward Direct Investment - The Role of Vertical Linkages

Alla Lileeva

The Canadian Economy in Transition from Statistics Canada, Economic Analysis Division

Abstract: Using data on manufacturing plants operating in Canada for the period 1981 to 1997, we estimate the effect of changes in the level of foreign control upon labour productivity in domestically-controlled plants. We distinguish between foreign control in own industry of domestically-controlled plants and foreign control in industries linked by their supply or use of intermediate inputs. We find that foreign control increases productivity growth in domestically-controlled plants in a way that is consistent with the transfer of technology from foreign suppliers to domestically-controlled plants. The positive productivity effects of foreign control are more pronounced for those plants that outsource more intermediates, and who purchase science-based intermediate inputs (i.e., electronics, machinery and equipment, and chemicals).

Keywords: Manufacturing; Business performance and ownership; Economic accounts; Business ownership; Productivity accounts (search for similar items in EconPapers)
Date: 2006-04-13
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp1e:2006010e

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