Does Foreign Ownership Increase Firms’ Productivity? Evidence from Firms Listed on Amman Stock Exchange

Tayem Ghada ()
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Tayem Ghada: Department of Finance, School of Business, The University of Jordan, Amman 11942, Jordan

Review of Middle East Economics and Finance, 2015, vol. 11, issue 1, 25-54

Abstract: The purpose of this paper is to investigate the impact of foreign ownership on the production efficiency of firms listed on the Amman Stock Exchange using hand-collected, firm-level data. Arab countries have been performing poorly in attracting foreign direct investment (FDI) inflows in comparison to other developing countries, and hence, they may be missing out on growth and development opportunities. Jordan, however, has been one of the most successful Arab countries in attracting FDI inflows relative to its economic size. Therefore, Jordan offers an ideal setting to examine the benefits of foreign ownership in the region. However, this study fails to find evidence supporting the notion that foreign ownership enhances production efficiency. This finding calls into question the economic viability of investment incentives designed to attract foreign investors.

Keywords: foreign ownership; knowledge transfer; FDI motivation; total factor productivity; labour productivity; MENA region (search for similar items in EconPapers)
JEL-codes: C42 F21 F23 G32 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1515/rmeef-2014-0024

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