Foreign Ownership and Robot Adoption
71 Pages Posted: 28 Sep 2021 Last revised: 15 Jun 2022
This paper shows that multinational enterprises (MNEs) spur the adoption of industrial robots. First, I document a positive and robust correlation between multinational production and robot adoption using a new cross-country industry-level panel. Second, using detailed data about Spanish manufacturing, I combine a difference-in-differences approach with a propensity score reweighing estimator and provide evidence that firms switching from domestic to foreign ownership become about 10% more likely to employ robots. The ability of expanding into foreign markets via the parental network is the key driver of the adoption choice. An empirical model of firm investment reveals that MNEs generate significant industry-level productivity gains but decrease the labor share by boosting robot adoption. However, the first effect is one order of magnitude larger than the second. These results provide new evidence about the efficiency versus equity trade-off that policymakers face when attracting MNEs.
Keywords: Foreign Ownership, Industrial Robots, Total Factor Productivity, Factor-Biased Productivity, Labor Share
JEL Classification: F23, O33
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