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

Tidiane Kinda

Applied Economics Letters, 2012, vol. 19, issue 6, 551-555

Abstract: Using a one-step stochastic frontier model for five developing countries, this article shows that foreign firms benefit from a better investment climate, which significantly explains why they are more efficient than local firms. This article uses the share of each firm's sales to multinationals located in the country to assess the importance of vertical spillovers, while controlling for the direct impact of the investment climate on efficiency. The results show that firms, particularly small local firms, selling more of their production to multinationals are more efficient, highlighting the presence of vertical spillovers through backward linkages.

Date: 2012
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Working Paper: Foreign ownership, sales to multinationals, and firm efficiency: The Case of Brazil, Morocco, Pakistan, South Africa, and Vietnam (2009)
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DOI: 10.1080/13504851.2011.587765

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