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Does Foreign Ownership Increase Firms’ Productivity? Evidence from Firms Listed on Amman Stock Exchange

Author

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  • Tayem Ghada

    (Department of Finance, School of Business, The University of Jordan, Amman 11942, Jordan)

Abstract

The purpose of this paper is to investigate the impact of foreign ownership on the production efficiency of firms listed on the Amman Stock Exchange using hand-collected, firm-level data. Arab countries have been performing poorly in attracting foreign direct investment (FDI) inflows in comparison to other developing countries, and hence, they may be missing out on growth and development opportunities. Jordan, however, has been one of the most successful Arab countries in attracting FDI inflows relative to its economic size. Therefore, Jordan offers an ideal setting to examine the benefits of foreign ownership in the region. However, this study fails to find evidence supporting the notion that foreign ownership enhances production efficiency. This finding calls into question the economic viability of investment incentives designed to attract foreign investors.

Suggested Citation

  • Tayem Ghada, 2015. "Does Foreign Ownership Increase Firms’ Productivity? Evidence from Firms Listed on Amman Stock Exchange," Review of Middle East Economics and Finance, De Gruyter, vol. 11(1), pages 25-54, April.
    • Handle: RePEc:bpj:rmeecf:v:11:y:2015:i:1:p:25-54:n:3
    DOI: 10.1515/rmeef-2014-0024
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    More about this item

    Keywords

    foreign ownership; knowledge transfer; FDI motivation; total factor productivity; labour productivity; MENA region;
    All these keywords.

    JEL classification:

    • C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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