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Multinational Companies and Indigenous Development: An Empirical Analysis

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  • Strobl, Eric
  • Görg, Holger

Abstract

This Paper presents an empirical study of the effect of foreign multinational companies on the development of indigenous firms in the host country. Our starting point is a recent paper by Markusen and Venables (1999) that shows formally that multinationals, through the creation of linkages with indigenous suppliers, can exert positive effects on the development of indigenous firms. Based on the literature on entry in industrial organisation, we estimate empirically a model describing the entry of indigenous firms using data for the Irish manufacturing sector. Our results indicate that there is a positive effect of multinational companies on the entry of indigenous firms for a variety of alternative specifications.

Suggested Citation

  • Strobl, Eric & Görg, Holger, 2002. "Multinational Companies and Indigenous Development: An Empirical Analysis," CEPR Discussion Papers 3325, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:3325
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    1. McAleese, Dermot & McDonald, Donogh, 1978. "Employment Growth and the Development of Linkages in Foreign-Owned and Domestic Manufacturing Enterprises," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(4), pages 321-339, November.
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    More about this item

    Keywords

    Multinational companies; Firm entry; Host country development;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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