Foreign-owned firms and productivity-enhancing restructuring in Finnish manufacturing industries

The direct contribution of foreign-owned companies (FOCs) to productivity-enhancing intra-industry restructuring in Finnish manufacturing is analyzed by means of a productivity decomposition method. It is found that the FOCs have had an increasing role on the micro-level productivity dynamics after the liberalization of the foreign-ownership legislation in 1993. However, when proportioned to the employment share, the change of their contribution seems less outstanding. Initially the restructuring component of the FOCs was disproportionally large but had normalized by the end of the 1990s.