Multinational Corporations and Productivity
Parents and affiliates of multinational corporations consistently exhibit higher levels of productivity, innovation, and superior management practices compared to their domestic counterparts. This raises several research questions: What is the underlying mechanism driving this pattern? What is the effect on the host economies in which these affiliates operate? Addressing these topics involves grappling with various challenges, ranging from data availability to empirical identification of the mechanisms at play, given that innovation, investment, and production location are all interdependent choices made by the firm. In this lecture, we will provide a non-exhaustive overview (bearing in mind that this is an extensive topic) of key findings derived from employing diverse analytical methods.