As part of the Brown Bag Lunch series, the International Economics Department at the Graduate Institute is pleased to invite you to a public talk given by Anmol Grewal, PhD Researcher in International Economics.

Foreign Linkages and Firm Productivity: Evidence from Enterprise Surveys

by Anmol Grewal

Abstract: This paper studies the firm-level dynamics of foreign linkages, innovation and productivity in developing economies. Using harmonized survey data from the World Bank Enterprise Surveys, I construct a panel dataset for 47 developing countries spanning 2003-2019. I estimate a structural model of how foreign linkages affect firm productivity. I distinguish between four types of foreign linkages: exports, imports, inward FDI and the use of foreign-licensed technology, and two types of innovation: product and process. I use a Heckman selection model followed by a control function approach to address the endogeneity between foreign linkages and firm productivity. I find that firms with foreign linkages are more likely to invest in innovation and generate greater innovation output, relative to firms without any foreign linkages. Furthermore, while inwards FDI and foreign inputs do not seem to have a significant effect on firm performance in developing countries, exporting firms are likely to have greater total factor productivity, relative to firms that serve only the domestic market.