Ownership structure and productivity of multinationals

By Çagatay Bircan

Governments frequently offer multinational companies various incentives in the hope that they will generate benefits to the local economy. But evidence of these benefits remains inconclusive. Do foreign owners actually improve technical efficiency at acquired firms or are they driven more by profit and market power? Do multinationals generate efficiency gains regardless of ownership structure or are some structures more beneficial to the local economy than others? This paper aims to answer these questions and document how multinational ownership affects productivity, competition and selection in the local economy.