{"id":4565,"date":"2018-07-18T08:30:28","date_gmt":"2018-07-17T22:30:28","guid":{"rendered":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/?p=4565"},"modified":"2018-07-17T10:25:15","modified_gmt":"2018-07-17T00:25:15","slug":"there-are-more-foreign-firms-than-we-think","status":"publish","type":"post","link":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/there-are-more-foreign-firms-than-we-think\/","title":{"rendered":"There are more foreign firms than we think!"},"content":{"rendered":"

Conventions for how we define things are of fundamental importance. Sometimes, however, we forget to question these conventions. The case at hand is the definition of a \u2018foreign\u2019 firm. The standard is the IMF definition, where a firm is defined as foreign when a single direct investor, who is resident in another economy, owns 10% or more of the company\u2019s shares (IMF\u00a01993). The conventional use of the IMF definition across many fields has been to look at only direct ownership links, to the neglect of indirect links. Capturing indirect links is, after all, difficult. Nonetheless, this reliance on direct ownership links fails to capture the nature of our globalizing world, where indirect ownership is becoming ever more common.\u00a0\u00a0The\u00a02016 World Investment Report<\/em>\u00a0(UNCTAD 2016) documents how the ownership structure of some MNEs is characterised by considerable vertical depth \u2013 that is, multiple steps from the ultimate owner to the affiliate, across multiple borders.\u00a0Who is the ultimate owner can be not obvious.<\/p>\n

In recent work (McGaughey et al. 2018), we show there are many firms that are categorised as domestic under the IMF-based convention but that are, in fact, controlled by foreigners. The implications of such a mis-classification can be very important. In our work, we consider the search for productivity spillovers to domestic firms that arise from foreign presence.\u00a0\u00a0We argue that by relying almost exclusively on direct ownership measures of FDI, past empirical studies have stacked the cards against finding positive spillover effects.<\/p>\n

Please click here to read the full “There are more foreign firms than we think!<\/a>” article published at the Centre for Economic Policy Research, written by Griffith Asia Institute member, Professor Sara McGaughey and Professor Pascalis Raimondos, Queensland University of Technology.<\/p>\n","protected":false},"excerpt":{"rendered":"

Conventions for how we define things are of fundamental importance. Sometimes, however, we forget to question these conventions. The case at hand is the definition of a \u2018foreign\u2019 firm. The standard is the IMF definition, where a firm is defined as foreign when a single direct investor, who is resident in another economy, owns 10%Continue reading “There are more foreign firms than we think!”<\/span><\/a><\/p>\n","protected":false},"author":42,"featured_media":4566,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[233],"tags":[803,348,399,804],"class_list":["post-4565","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-feature-series","tag-foreign-investment","tag-international-business","tag-professor-sara-mcgaughey","tag-spillovers"],"acf":[],"modified_by":"Jill Moriarty","yoast_head":"\nThere are more foreign firms than we think! | Griffith Asia Insights<\/title>\n<meta name=\"description\" content=\"Conventions for how we define things are of fundamental importance. 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