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Surviving The Global Financial Crisis: FDI And Establishment Performance

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Executive Summary

The authors examine in this paper the differential response of establishments to the global financial crisis, with particular emphasis on the role of Foreign Direct Investment (FDI) in determining micro economic performance. Using a new worldwide dataset that reports the activities of more than 12 million establishments before and after 2008, they investigate how multinationals around the world responded to the crisis relative to local firms. They explore three distinct channels through which FDI affects establishment performance, the production linkages, the financial link-ages, and the multinational networks. This analysis shows that while multinational owned establishments performed, on average, better than their local competitors, there is considerable heterogeneity in the role of FDI.

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