Does foreign ownership matter for survival and growth? Dynamics of competition and foreign direct investment

Sule Ozler () and Erol Taymaz
Additional contact information
Sule Ozler: Department of Economics, UCLA

No 406, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: Foreign direct investment has been considered for a long time as an important channel for transfer of technology to developing countries, and an important tool to generate jobs in those countries. Multinationals bring the factor that developing countries need most, capital, and therefore, they may also help to ease the unemployment pressure created by a rapidly growing (urban) population. It is shown by many researchers that foreign establishments are much more productive than domestic firms, but the empirical evidence regarding technology spillovers is not unambiguous. In this paper, we suggest that the impact of foreign direct investment on local industry hinges on the dynamics of foreign and domestic establishments, i.e., entry, selection (exit), and growth processes. Our analysis on foreign and domestic establishments in Turkish manufacturing industry for the period 1983-96 indicates that foreign establishments have a better performance level than domestic ones when they are first established in the local market, and have a higher survival probability. However, when the establishment characteristics are controlled for, domestic establishments have the same survival probability, but achieve lower rates of employment growth in the early post-entry period.

Keywords: Turkey; foreign direct investment; firm dynamics; entry; exit; growth (search for similar items in EconPapers)
JEL-codes: L11 L25 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2004-03, Revised 2004-03
New Economics Papers: this item is included in nep-ent and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://erc.metu.edu.tr/en/system/files/menu/series04/0406.pdf First version, 2004 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:met:wpaper:0406

Access Statistics for this paper

More papers in ERC Working Papers from ERC - Economic Research Center, Middle East Technical University Contact information at EDIRC.
Bibliographic data for series maintained by Erol Taymaz ().