Do the Biggest Aisles Serve a Brighter Future? Global Retail Chains and Their Implications for Romania
During the past two decades many economies have opened their retail sector to foreign direct investment, yet little is known about possible implications of such liberalization on the economies of developing host countries. Using firm-level data fro...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2008/06/9573344/biggest-aisles-serve-brighter-future-global-retail-chains-implications-romania http://hdl.handle.net/10986/6876 |
| Summary: | During the past two decades many
economies have opened their retail sector to foreign direct
investment, yet little is known about possible implications
of such liberalization on the economies of developing host
countries. Using firm-level data from Romania, this study
examines how the presence of global retail chains affects
firms in the supplying industries. Applying a
difference-in-differences method, the econometric analyses
yield the following conclusions. 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 15.2 percent and
doubling the number of chains leads to a 10.8 percent
increase in total factor productivity. However, the
expansion benefits larger firms the most and has a much
smaller impact on small enterprises. This conclusion is
robust to several extensions and specifications, including
the instrumental variable approach. These results suggest
that the opening of the retail sector to foreign direct
investment may stimulate productivity growth in upstream
manufacturing and extend our understanding of foreign direct
investment in service sectors. |
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