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Quantifying productivity gains from foreign investment

Christian Fons-Rosen, Sebnem Kalemli-Ozcan, Bent Sorensen, Carolina Villegas-Sanchez and Vadym Volosovych

Journal of International Economics, 2021, vol. 131, issue C

Abstract: We revisit the relationship between foreign investment and productivity of acquired firms. First, we construct a panel firm-level dataset for eight advanced European countries covering domestic and foreign acquisitions together with detailed balance sheet information for the years 1999–2012. Second, we address the challenge of identifying a causal relation. To that end, we compare foreign to domestic acquisitions in addition to accounting for the impact of majority versus minority acquisitions after controlling for country and sector trends. The productivity of foreign acquired affiliates increases modestly after four years, but only when majority stakes are acquired by foreigners. Our results are driven by foreign acquisitions and not by foreign divestment.

Keywords: Multinationals; Selection; Majority ownership; Advanced countries (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 O16 (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Quantifying Productivity Gains from Foreign Investment (2020) Downloads
Working Paper: Quantifying Productivity Gains from Foreign Investment (2013) Downloads
Working Paper: Quantifying Productivity Gains from Foreign Investment (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:131:y:2021:i:c:s0022199621000337

DOI: 10.1016/j.jinteco.2021.103456

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