Open AccessPerformance of Foreign and Local Firms in Pakistan: A Comparison
Author(s) -
Zafar Mahmood,
Jafar Hussain
Publication year - 1991
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v30i4iipp.837-847
Subject(s) - capital intensity , productivity , argument (complex analysis) , capital (architecture) , production (economics) , control (management) , distribution (mathematics) , foreign capital , economies of scale , scale (ratio) , business , product (mathematics) , economics , industrial organization , human capital , foreign direct investment , labour economics , market economy , microeconomics , macroeconomics , history , mathematical analysis , biochemistry , chemistry , physics , mathematics , management , archaeology , geometry , quantum mechanics
There is a little doubt in the argument that foreign-owned(henceforth foreign) fIrms are more productive than local fIrms inless-developed countries because the former use more capital-intensivetechniques, employ more qualifIed workers, and are able to reap theeconomies of scale [see Blomstrom (1988); Chudnovsky (1979) and Willmore(1986)]. Such arguments, however, do not ascertain whether effIciency offoreign fIrms is due to any ownership-specifIc advantage or to otherfactors such as industrial distribution (product mix), size of the fIrm,capital intensity, skill intensity, market concentration, and exportorientation. To arrive at some conclusive empirical verifIcationconcerning the labour productivity differences between foreign and localfirms, it is essential to take into account the difference betweencapital intensity and skill intensity, etc., and control the size andproducts of fIrms. Most of the previous studies are aggregative andfailed to control for differences in size or type of products. Moreover,the previous studies considered only a few aspects ofperformance.