Foreign ownership and spillovers : an econometric study of Ghana's manufacturing industry

Abstract

This paper studies the total factor productivity gains, export participation and spillovers of foreign ownership in Ghanaian manufacturing industry. This is based on a comprehensive panel data on manufacturing firms collected as part of the enterprise survey over the period 1991-2002. Controlling for simultaneity, endogeneity bias, firm and year fixed effects, firm productivity is first estimated. Results show that foreign owned firms are on average 7% more productive than domestic firms in the same sub-sector and location. Besides, there is statistical evidence suggesting that domestic firms will gain in productivity via spillovers from foreign owned firms. Lastly, I find that, domestic firms are 3.1% more likely to participate in exports with increasing share of foreign owned firms in the same sector.