Publication

Using information on more than 1000 firms in a number of emerging countries, the authors find quantitative evidence that suppliers of multinationals that are pressured by their customers to reduce production costs or develop new products have higher productivity growth than other firms, including other host country suppliers of multinationals. These findings provide initial empirical support for a “forced linkage effect” from supplying multinational companies. The paper's findings hold true even when other factors within and outside the supplier-customer relationship and when endogenous concerns are taken into consideration.