The effect of foreign enterprises and competition on efficiency in the manufacturing sector in Uruguay 1988-1994

Ruben Tansini () and Rosario Domingo ()
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Ruben Tansini: Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República
Rosario Domingo: Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República

No 1910, Documentos de Trabajo (working papers) from Department of Economics - dECON

Abstract: In this study we estimated Stochastic Frontier Production Functions for different sub-samples of panel data of Uruguayan manufacturing firms, to evaluate the spillover effect of the presence of foreign affiliates and international competition on technical efficiency in locally-owned firms. The results suggest that the presence of FDI has a positive effect on the level of technical efficiency in local firms. Furthermore, we found that average technical efficiency in locally-owned firms in industries where foreign affiliates are present is higher than those of firms in industries with no foreign presence. We also found that significant spillover effects on technical efficiency arise when technology gap between local and foreign firms is moderate, and when the foreign affiliate’s sales are mainly oriented to the local market. Moreover, our results suggest that when foreign firms are present in an industry their positive impact on the technical efficiency of local firms seems to be greater than the impact of competition from imported goods.

Keywords: Foreign direct investment; Spillovers; Technical efficiency; Productivity; Stochastic Frontier Production Functions (search for similar items in EconPapers)
JEL-codes: C23 D24 F23 L60 O13 O33 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010-11
New Economics Papers: this item is included in nep-cis and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ude:wpaper:1910

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