Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/103770 
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper No. 1961
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
We implement a method to estimate the direct effects of foreign-ownership on foreign firms' productivity and the indirect effects (or spillovers) from the presence of foreign-owned firms on other foreign and domestic firms' productivity in a unifying framework, taking interactions between firms into account. To do so, we relax a fundamental assumption made in empirical studies examining a direct causal effect of foreign ownership on firm productivity, namely that of no interactions between firms. Based on our approach, we are able to combine direct and indirect effects of foreign ownership and calculate the total effect of foreign firms on local productivity. Our results show that all these effects vary with the level of foreign presence within a cluster, an important finding for the academic literature and policy debate on the benefits of attracting foreign owned firms.
Subjects: 
foreign direct investment
treatment effects
SUTVA
propensity score matching
JEL: 
F23
C18
Document Type: 
Working Paper

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