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Impact of Multinational Enterprises on Competition, Productivity and Trade Spillovers across European Firms

Jan Hanousek (), Evžen Kočenda and Pavla Vozárová ()
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Pavla Vozárová: Czech Technical University in Prague, Czech Republic

Czech Journal of Economics and Finance (Finance a uver), 2020, vol. 70, issue 2, 172-212

Abstract: We analyze the impact of multinational enterprises (MNEs), via their foreign direct investment, on domestic firms in 30 European host economies, from 2001 to 2013. We incorporate international industrial and trade linkages into a standard theoretical framework and test them empirically on a unique dataset compiled from the Amadeus, Eurostat, UNComtrade and BACI data sources, aggregated at industry level. While controlling for horizontal, vertical, and export channels at the upstream and downstream levels, we show that the presence of MNEs significantly affects domestic firms by changing the degree of competition and improving productivity. The impact is not always positive, as domestic firms are often crowded-out, but the negative effect for an average firm is mostly small.

Keywords: multinational enterprise (MNE); foreign direct investment (FDI); European firms; spillovers; international trade (search for similar items in EconPapers)
JEL-codes: C33 F15 F21 F23 O24 (search for similar items in EconPapers)
Date: 2020
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