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During the past two decades many countries have opened their retail sector to foreign direct investment, yet little is known about implications of such liberalization for the economies of host countries. Using firm-level data from Romania, this study examines how the presence of global retail chains affects firms in the supplying industries. The results suggest that the expansion of global retail chains leads to a significant increase in the total factor productivity in the supplying industries. Their presence in a region increases the total factor productivity of firms in the supplying industries by 3.8 to 4.7 percent, while doubling the number of chains leads to an increase of 3.3 to 3.7 percent.
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