Foreign Ownership, Competition, and Survival Dynamics

Foreign Ownership, Competition, and Survival Dynamics The impact of foreign direct investment on host countries’ industrial sectors has received considerable attention. It is shown by many researchers that foreign plants are more productive than are domestic ones, but the empirical evidence regarding spillovers is not unambiguous. In this paper, we suggest that the impact of foreign direct investment on local industry hinges on the dynamics of foreign and domestic plants—i.e., on entry and selection (exit) processes. Our analysis of foreign investment and competition dynamics in Turkish manufacturing industry for the period 1983–2001 indicates that foreign plants have a better performance level than do domestic ones when they are first established in the local market, and, subsequently, are more likely to survive but; the difference in survival probabilities disappears when the industry and/or plant characteristics are controlled for. Moreover, foreign presence seems to have no long-term effect on the survival prospects of domestic plants. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Foreign Ownership, Competition, and Survival Dynamics

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Publisher
Springer US
Copyright
Copyright © 2007 by Springer Science+Business Media, LLC
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-007-9144-x
Publisher site
See Article on Publisher Site

Abstract

The impact of foreign direct investment on host countries’ industrial sectors has received considerable attention. It is shown by many researchers that foreign plants are more productive than are domestic ones, but the empirical evidence regarding spillovers is not unambiguous. In this paper, we suggest that the impact of foreign direct investment on local industry hinges on the dynamics of foreign and domestic plants—i.e., on entry and selection (exit) processes. Our analysis of foreign investment and competition dynamics in Turkish manufacturing industry for the period 1983–2001 indicates that foreign plants have a better performance level than do domestic ones when they are first established in the local market, and, subsequently, are more likely to survive but; the difference in survival probabilities disappears when the industry and/or plant characteristics are controlled for. Moreover, foreign presence seems to have no long-term effect on the survival prospects of domestic plants.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Sep 14, 2007

References

  • Does entry size matter? The impact of the life cycle and technology on firm survival
    Agarwal, R.; Audretsch, D.B.

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