The contribution of foreign entrants to employment and productivity growth

Abstract

We compare employment and productivity dynamics in foreign and domestic entrants, exitors, survivors and acquisitions in Norwegian manufacturing from 1979- 2000. All types of foreign plants are on average more productive than their domestic counterparts. There is more gross job reallocation in domestic than in foreign plants. Contrary to common beliefs, foreign owners do not acquire highly productive do- mestic plants in order to lay off their employees. Instead they manage to reverse a negative trend in productivity and employment in the acquired plants. During the boom from 1992-97 foreign plants taken together, with a market share of 38%, accounted for 61% of productivity growth.