Foreign Presence and Market Concentration: The Case of Portuguese Manufacturing Industries

Rosa Forte and Paula Sarmento

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: The impact of foreign direct investment (FDI) on host country market concentration has been a controversial issue, both at the theoretical and the empirical levels. Most existing empirical studies point to a positive relationship, enhancing the negative effects of FDI on competition conditions, but there are also studies that support the argument that FDI reinforces competition. In this paper we analyze the impact of FDI on market concentration considering the Portuguese manufacturing industries in the period 2006-2009. Using panel data estimation we found a significant negative impact of FDI on industry concentration, which is in line with the results of other studies for developed countries, and gives support to arguments that FDI has positive effects on domestic firms, eventually through positive externalities.

Keywords: Foreign Direct Investment; Market Concentration; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 F23 L11 L60 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012-02
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:444

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