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Foreign Firm Ownership and Productivity Spillovers in the Southern African Development Community (SADC) Region

13 April 2016
Publication Type: Working Paper
JEL Code: O33

The study uses firm level data from the World Bank Enterprise Surveys and employs alternative techniques to identify and estimate the within and intra-industry productivity impact of firm foreign ownership in SADC. Using firm labour productivity and employing sector fixed effects to identify the impact of foreign firm ownership on productivity, we find results that strongly suggest the existence of positive within firm and intra-industry FDI productivity spillovers for both small and large firms in the region. The productivity gains are, however, larger for small firms than for large firms suggesting greater productivity spillover advantages for the relatively technologically backward small firms. Similarly, there is heterogeneity with regard to productivity spillovers across individual countries, with the relatively technologically advanced countries such as South Africa and Mauritius experiencing larger intra-industry spillovers while less technologically endowed countries enjoy larger within firm gains.

Series title: Working paper 596
1 April 2016
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