73rd International Atlantic Economic Conference

March 28 - 31, 2012 | Istanbul, Turkey

Performance of foreign affiliates in German manufacturing: Evidence from a new database

Saturday, 31 March 2012: 2:35 PM
John P. Weche Geluebcke, Dipl.Oec. , Empirical Economics, Institute of Economics, Leuphana University Lueneburg, Lueneburg, Germany
This study presents the first investigation into the performance of foreign-controlled enterprises in German manufacturing based on new micro-data from official statistics. A comprehensive set of performance variables was examined not only by comparing unconditional mean values but also by accounting for other determinants and differences across distributions. The analysis revealed a foreign ownership performance premium with regard to productivity, R&D and export intensities, and average wages. Only profitability did not seem to differ from German-owned enterprises. Results were verified by varying comparison groups of indigenous firms and separating for high- and low-tech sectors. Furthermore, a breakdown by country of origin and type of ownership showed considerable heterogeneity of foreign-controlled affiliates in Germany.