ESRI Research Seminar: "Investment liberalisation, Technology Take-Off and Export Market Entry: Does Foreign Ownership Structure Matter?"

Venue: ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2

Speaker:
Holger Gorg (Kiel Institute for the World Economy; University of Kiel; IZA and CEPR)

Abstract:
We examine the role of foreign ownership structure in stimulating export market entry and R&D investment during a period of investment liberalisation following China’s accession to WTO in 2001. Focusing on firms with no prior exporting and R&D experience, we evaluate the effects of foreign acquisitions on the likelihood of exporting and investing in R&D for the first time. Using “doubly robust” propensity score reweighted logistic regression to control for the possible endogeneity of foreign acquisition and structure decisions, we uncover strong effects on export activity post-acquisition for all types of foreign ownership structure. We also find that targets that are taken over with a less than 100 per cent foreign ownership share experience higher likelihood of R&D. This effect is very strong in the year of acquisition, while it is insignificant or even negative 2 years after acquisition. This suggests that acquired firms might transfer technology in the first year to avail of tax incentives and tacit encouragement by the Chinese government, but that these policies do not have a lasting effect as some acquirers shift the technology back over time.