Does Foreign Presence Stimulate Creative Destruction in Local Markets

Maliranta MikaNurmi Satu

This paper studies the effect of foreign-owned companies (FOCs) in the region on establishment survival and growth in the Finnish business sector. We analyze whether the presence of the FOCs has asymmetric effects among the local businesses. Foreign presence in the region is measured in a novel way by using the regional links between establishments and their workers in the local labour markets. Evidence for small service establishments suggests that the presence of the FOCs contributes to aggregate productivity by cleansing inefficient units. The FOCs do not seem to stimulate productivity-enhancing restructuring among large, manufacturing or continuing establishments.

Publication info

Series
Discussion Papers no. 1114
Date
2007
Avainsanat
ulkomaalaisomistus, paikalliset työmarkkkinat, henkiinjääminen, kasvu, yrityksen tehokkuus, valikoituminen, uudelleen kohdentuminen
Keywords
foreign ownership, local labour markets, survival, growth, company efficiency, selection, reallocation
JEL
F23,J23,R11,R23
Pages
15
Price
10 €
Availability of print version
Language
English