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Foreign investors, firm level productivity, and European economic integration

Bailey, W., Muradoglu, G., Onay, C. & Phylaktis, K. ORCID: 0000-0001-9392-1682 (2024). Foreign investors, firm level productivity, and European economic integration. Journal of Corporate Finance, 85, article number 102564. doi: 10.1016/j.jcorpfin.2024.102564


Using a comprehensive sample of listed and unlisted firms from 34 European countries, we study firm-level manufacturing outcomes conditioned on foreign investment, country characteristics, and EU membership. Higher foreign ownership is associated with higher productivity but lower employment, particularly when the host or source country is an EU member and scores high on disclosure and investor protection, and low on corruption. We confirm our interpretation using staggered EU accession dates and industry-level external financial dependence interacted with a financial crisis. The subset of Eastern European countries appears to benefit from foreign investment and EU accession without losing jobs. Nevertheless, manufacturing outcomes associated with survey findings on public sentiment towards globalization and migration confirm the social and political costs of globalization.

Publication Type: Article
Additional Information: © 2024. This manuscript version is made available under the CC-BY-NC-ND 4.0 license in new tab/window)
Publisher Keywords: Foreign direct investment, FDI, European Union, Productivity, Employment
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School
Bayes Business School > Finance
SWORD Depositor:
[thumbnail of BMOP-EU 22Feb2024 WB on top of -16-Feb-2024 WB-COS-GM.pdf] Text - Accepted Version
This document is not freely accessible until 1 September 2025 due to copyright restrictions.
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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