The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies

This paper uses firm level panel data to investigate empirically the effects of foreign direct investment (FDI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe-Bulgaria, Romania and Poland. To this end, a unique firm level panel data set is used with detailed information on foreign ownership at the firm level. Two main questions are addressed: 1) Do foreign firms perform better than their domestic counterparts? 2) Do foreign firms generate spillovers to domestic firms?http://deepblue.lib.umich.edu/bitstream/2027.42/39728/3/wp344.pd

The Effects of Foreign Direct Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies

This paper uses firm level panel data to investigate empirically the effects of foreign direct investment (FDI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe-Bulgaria, Romania and Poland. To this end, a unique firm level panel data set is used with detailed information on foreign ownership at the firm level. Two main questions are addressed: 1) Do foreign firms perform better than their domestic counterparts? 2) Do foreign firms generate spillovers to domestic firms?foreign investment, spillovers, emerging countries, panel data

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

This paper analyzes the demand for labor by home multinational enterprises (MNEs) in Europe. To this end we use a unique firm level panel data set of more than 1,200 European multinational enterprises and their subsidiaries that are located in either the European Union, Central and Eastern Europe or both. We investigate whether employment in the MNEs' subsidiaries are substitutes for home employment or in other words we investigate whether European MNEs can easily relocate employment between the parent and their daughter(s). Our main findings can be summarized as follows: (i) We find evidence for substitution effects between parent and foreign employment. A decline of 10% in MNE affiliate's wage costs is associated with a decline in parent employment of between 1.5% and 2% on average. (ii) This effect is mainly driven by firms that operate in the manufacturing sector. Moreover, the substitution effects mainly take place between EU parents and their affiliates located within the EU, rather than affiliates located in Central and Eastern Europe. (iii) We also report results for the non-manufacturing firms, where we find no substitution effects between parents and daughters in the service sectors, while we do find positive substitution effects between parents and their affiliates in Central and Eastern Europe for the firms operating in the wholesale trade and construction sectors. Our results suggest that on average the competition from low wage countries in Central and Eastern Europe did not contribute to a relocation of domestic jobs to Central and Eastern Europe. Substitution effects do take place, however, they mainly occur between parent firms and their affiliates that are located in the European Union.http://deepblue.lib.umich.edu/bitstream/2027.42/39755/3/wp371.pd

Marshall and Labour Demand in Russia: Going Back to Basics

Using a unique enterprise-level data set, which covers the regions Moscow City, Chelyabinsk, Krasnoyarsk and Chuvashia and the three sectors manufacturing and mining, construction and trade and distribution, we estimate Russian labour demand equations for the year 1997. The most important conclusion that can be drawn is that labour demand is inelastic in international perspective if we estimate a labour demand equation for all regions and all sectors combined. So, Russian MLEs well into the transition still exhibit peculiar behaviour as far as wage employment trade-offs are concerned. We try to relate this inelastic labour demand to basic neoclassical theory by testing Marshall's rules of derived demand. Our results show that testing these rules seems a promising avenue for establishing some of the driving forces, which are behind labour demand in Russia.labour demand, rules of derived demand, enterprise performance, transition to a market economy

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

This paper analyzes the demand for labor by home multinational enterprises (MNEs) in Europe. To this end we use a unique firm level panel data set of more than 1,200 European multinational enterprises and their subsidiaries that are located in either the European Union, Central and Eastern Europe or both. We investigate whether employment in the MNEs' subsidiaries are substitutes for home employment or in other words we investigate whether European MNEs can easily relocate employment between the parent and their daughter(s). Our main findings can be summarized as follows: (i) We find evidence for substitution effects between parent and foreign employment. A decline of 10% in MNE affiliate's wage costs is associated with a decline in parent employment of between 1.5% and 2% on average. (ii) This effect is mainly driven by firms that operate in the manufacturing sector. Moreover, the substitution effects mainly take place between EU parents and their affiliates located within the EU, rather than affiliates located in Central and Eastern Europe. (iii) We also report results for the non-manufacturing firms, where we find no substitution effects between parents and daughters in the service sectors, while we do find positive substitution effects between parents and their affiliates in Central and Eastern Europe for the firms operating in the wholesale trade and construction sectors. Our results suggest that on average the competition from low wage countries in Central and Eastern Europe did not contribute to a relocation of domestic jobs to Central and Eastern Europe. Substitution effects do take place, however, they mainly occur between parent firms and their affiliates that are located in the European Union.relocation, multinational enterprises, labor demand

The impact of payroll tax reductions on employment and wages: A natural experiment using firm level data.

Labour market; Market; Markets; Model; Impact; Employment; Firm level data; Data;

Antidumping Protection hurts Exporters: Firm-level evidence from France

Firms protected by antidumping measures do not unequivocally benefit from them. Antidumping protection benefits non-exporters active on the protected market by raising their domestic sales, but hurts exporters of similar products as the protected ones. Export sales of protected firms fall by almost 8% compared to a relevant control group of unprotected firms. This effect more than doubles for firms that are global, i.e. firms with foreign affiliates. Measured at the product-level, extra-EU exports of goods protected by antidumping fall by 36% while exports to target countries fall by as much as 66% following protection. Protection also has an effect on the extensive margin, by raising the probability to start exporting for firms that were initially nonexporters. Existing exporters face a higher probability to stop exporting during protection. Finally, we find that the productivity of exporters falls while that of non-exporters rises during antidumping protection. We offer a number of plausible explanations for our findings that stem from the heterogeneous firm literature. We also discuss the importance of our findings for policy.Antidumping, firm-level exports, intensive margin, extensive margin, productivity, dif-in dif

The adjustment of financial ratios in the presence of soft budget restraints: Evidence from Bulgaria.

This paper is the first to study the behaviour of financial ratios in a Central European country. Using the entire population of company accounts in Bulgaria we find that for the financial ratios we considered, adjustment towards an industry target takes place but is significantly lower than that for Western companies reported in earlier studies. We find the adjustment of financial ratios in Bulgaria to be slowest in those firms, characterised by Soft budget constraints, which is a widespread phenomenon in Central Europe. We also find that the speed of adjustment is not significantly different between quoted and unquoted Bulgarian firms. This could be explained by the virtual inexistence of equity markets.Financial ratios; Ratios; Industry; Markets;