Beyond Capital: Monitoring Development Outcomes of Multinational Enterprises

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Global Investment Competitiveness Report 2019/2020: Rebuilding Investor Confidence in Times of Uncertainty

“…In developing economies, there are fewer records of effects of acquisitions on employment, but they are generally positive. 3 These findings are consistent with the findings that foreign investment in existing firms improves productivity (Bircan 2019;Conyon et al 2002;Lichtenberg and Siegel 2000;Maksimovic and Phillips 2001;Maksimovic, Phillips, and Prabhala 2008;Schoar 2002), which tends to be associated with larger size. Skill and knowledge transfers, as well as increased labor efficiency are the main channels through which improvements happen.…”

“…These conditions include the policy environment, quality of local institutions and financial markets, sector characteristics, and spatial colocation of domestic with foreign firms. Sources: Alfaro 2017;Lejárraga and Ragoussis 2018. Improvements in the competitiveness of firms acquired by foreign investors, however, pass through only partially to workers. The productivity premiums of both brownfield and greenfield affiliates over domestic firms should translate into broadly similar wage premiums for workers.…”