Productivity Gains after Outward FDI: Evidence from Slovenia

Abstract

This paper analyzes whether firms that engage in outward foreign direct investment, experience productivity gains in their domestic plants. To this end, we apply the methodology of De Loecker (2013) to firm-level data on the Slovenian manufacturing industry from 1994 to 2002. Our findings indicate that firms that invested abroad experience a higher productivity growth than firms that did not, controlling for many relevant variables such as past productivity, export status and industry of the firm. The gains only occur for investments outside of former Yugoslavia. They are larger for initially more productive firms and only occur some years after the investment.

Outward Foreign Direct Investment and Domestic Output: Evidence from East Asian Economies

“…They suggest no significant positive or negative effect of outward FDI on productivity. However, Damijan and Decramer (2014) do not confirm this result for firm-level data on the Slovenian manufacturing industry from 1994 to 2002. Instead, they illustrate that firms that invest abroad experience a higher amount of productivity growth.…”