Does International Openness Affect Productivity of Local Firms? Evidence from Southeastern Europe
LICOS Discussion Paper 219/2008
31 Pages Posted: 30 Mar 2009
There are 2 versions of this paper
Does International Openness Affect Productivity of Local Firms? Evidence from Southeastern Europe
Date Written: 2008
Abstract
This paper examines the role of international openness on the change of firm productivity in southeastern Europe (SEE). This is a crucial question for middle income countries. Using firm-level data for six transition economies over the period 1994-2002, we identify whether foreign ownership and propensity to trade with more advanced countries can bring about higher learning effects. We find that (i) foreign ownership has helped at restructuring and enhancing productivity of local firms in four out of six countries, (ii) exporting to advanced markets has a larger impact on productivity growth in four countries, especially when firm's absorptive capacity is taken into ccount, (iii) in contrast, exporting to the less competitive markets of ex-Yugoslavia seems to affect negatively the productivity growth in three countries, and (iv) learning effects from importing follow a similar path than exporting. Our results suggest that trade liberalisation is not uniformly beneficial. Regional composition of trade flows and absorptive capacity of local firms matter. Trade liberalisation within the SEE region thus may not provide a substitute for a general trade liberalisation and access to the more competitive markets of OECD countries.
Keywords: trade liberalisation, international trade, foreign ownership, total
JEL Classification: F14, D24, L25
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Wages and Foreign Ownership: A Comparative Study of Mexico, Venezuela and the United States
By Brian Aitken, Ann E. Harrison, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?
By Jonathan Haskel, Sonia C. Pereira, ...
-
Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?
By Holger Görg and David Greenaway
-
Much Ado About Nothing? Do Domestic Firms Really Benefit from Foreign Investment?
By Holger Görg and David Greenaway
-
Foreign Direct Investment as a Catalyst for Industrial Development
-
Foreign Investment and Productivity Growth in Czech Enterprises
By Bernard Hoekman and Simeon Djankov
-
Technology Transfer and Spillovers? Does Local Participation with Multinationals Matter?
By Magnus Blomstrom and Fredrik Sjoholm