Inward Foreign Direct Investment, Transactions, and Domestic Firms' Performance: Evidence from firm-to-firm transaction linkage

Tadashi Ito and Ayumu Tanaka

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: Many studies have attempted to use industry-level variations in the presence of foreign firms to estimate the impact of foreign firms on domestic firms. However, owing to the limitations of industry-level data, the channels through which foreign firms influence domestic firms are unclear. Our study used a large set of Japanese firm-to-firm transaction data to test whether domestic firms’ performance improves through firm-to-firm transactions with foreign-affiliated firms. Our empirical analyses using the state-of-the-art technique of causal inference, such as event study design and staggered difference-in-differences estimator, show no evidence of positive spillover effects of MNEs on domestic firms through business transactions.

Pages: 36 pages
Date: 2023-03
New Economics Papers: this item is included in nep-cse, nep-fdg, nep-int and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:23026

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