Do Domestic Firms Benefit from Foreign Presence and Import Competition in Irish Services Sectors?

25 Pages Posted: 11 Feb 2014

Date Written: February 2014

Abstract

This paper examines whether domestic firms benefit from the pro‐competitive effects of imports from abroad and from the presence of foreign‐owned firms in the host country in three Irish market‐services sectors between 2001 and 2007. Grouping the three sectors together masks opposing effects in individual sectors. Where significant, the effect of foreign presence on domestic firms tends to be negative, this is mainly the case in wholesale and retail trade. Despite it being of lesser importance than foreign presence in these sectors, import competition from abroad is negatively associated with domestic firms' productivity in wholesale and retail trade, but positively in transport, storage and communication. There is no significant effect of foreign presence or import competition in real estate, rental and business activities. Using capital‐labour ratios as an input‐based indicator related to productivity suggests that domestic firms adapt to increased foreign competition by adjusting their inputs.

Suggested Citation

Haller, Stefanie, Do Domestic Firms Benefit from Foreign Presence and Import Competition in Irish Services Sectors? (February 2014). The World Economy, Vol. 37, Issue 2, pp. 219-243, 2014, Available at SSRN: https://ssrn.com/abstract=2393746 or http://dx.doi.org/10.1111/twec.12120

Stefanie Haller (Contact Author)

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland

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