Foreign Presence, Spillovers, and Productivity: Evidence from Ghana

SummaryThis paper investigates the effect of foreign presence at the sector and firm levels on the productivity of manufacturing firms in Ghana. We examine both labor and total factor productivity (TFP) and control for a number of observed factors as well as unobserved heterogeneity. We find robust evidence that the presence of foreign firms in a sector has a negative effect on domestically owned, but a positive effect on most foreign-owned firms. Unlike in recent work on China, it does not appear that the negative level effect is compensated for by a positive growth effect, at least not in any reasonable time period. We find no evidence of any wage effects.