Do Foreign Firms Crowd Out Domestic Firms? Evidence from the Czech Republic
The Review of Economics and Statistics
2010
I examine how foreign presence affects the growth and survival of domestic firms. Separating a negative crowding out and positive technology spillovers, I analyze whether the crowding out effect is dynamic, that is, domestic firms cut production over time as foreign firms grow, or a static effect realized on foreign entry into the industry. Using 1994–2001 firm-level Czech data, I find evidence of both technology spillovers and crowding out. However, crowding out is only short term; after initial entry shakeout, growing foreign sales increase domestic firm growth and survival, indicating domestic demand creation effect. However, I find no such benefits from domestic competition.
- DOI
- 10.1162/rest_a_00035
- Volume
- 92 (4)
- Pages
- 861-881
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref