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

Jan Hanousek, Evžen Kočenda and Pavla Vozarova ()
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Pavla Vozarova: Faculty of Information Technology, Czech Technical University

No 1028, KIER Working Papers from Kyoto University, Institute of Economic Research

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 and 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)
Pages: 35pages
Date: 2020-04
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eec, nep-eff, nep-int and nep-sbm
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Journal Article: Impact of Multinational Enterprises on Competition, Productivity and Trade Spillovers across European Firms (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:1028

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