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Surviving the Crisis: Foreign Multinationals versus Domestic Firms

Authors


  • We are very grateful to Kevin Phelan of the Central Statistics Office for his unstinting help with the CIP data and to participants at the Lehigh conference and a seminar at the Kiel Institute for very helpful comments. We gratefully acknowledge financial support through the European Commission, as part of the SERVICEGAP Project (Grant Agreement no. 244 552).

  •  See http://www.bbc.co.uk/news/business-12931167, accessed on 16 May 2011.

Abstract

Starting from the observation that all firms in Ireland (foreign and domestic in manufacturing and services industries) were hit by the crisis, the paper asks whether there is a difference in the behaviour of foreign and domestic firms. One hypothesis is that foreign multinationals are less linked into the Irish economy, so more likely to leave once the economy is hit by a negative shock. The paper discusses background hypotheses before giving empirical evidence from first, aggregate data and second, firm-level observations. The analysis of the latter suggests that foreign firms are not more likely to leave during the crisis than Irish firms. Some policy conclusions are offered in the paper.

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