Productivity advantages and spillovers of globalization for the host economy
Enter plain text and/or HTML tags.
This paper examines the main determinants of productivity with special emphasis on the degree of foreign ownership and the importance of financial constraints. Productivity spillovers caused by multinational presence in an industry are also examined. The analysis is based on a representative sample of domestic and foreign firms operating in South Africa. This data set provides new information on the sectoral composition of multinational ownership and its impact on labour productivity. Interesting results include a positive and significant effect on labour productivity of foreign ownership which stems from full and majority owned affiliates only. Minority holdings exhibit no significant productivity differences. Other productivity enhancing factors are size. capital intensity, borrowing capacity and cash flow availability. Productivity spillovers benefiting local firms are differentiated by degree of foreign ownership, with minority holdings exercising a much stronger effect. Such distinct foreign direct investment effects stress the importance of policy modifications depending on the economic development of host countries.
Exit without saving