Local Intermediate Inputs, Foreign Direct Investment and the Performance of Domestic Firms: When Firms Share common Local Input Suppliers by H.L. Kee Comments by Michael Moore (GWU and IIEP)

Domestic Producers Foreign markets TFP Sales per worker Output per worker

Domestic Producers Imported intermediate goods Foreign markets TFP Sales per worker Output per worker

Domestic Producers FDI Imported intermediate goods Foreign markets TFP Sales per worker Output per worker

Domestic Producers i FDI i Imported intermediate goods Domestic intermediate good producers Foreign markets TFP Sales per worker Output per worker “siblings” in sector i

Domestic Producers FDI Domestic intermediate good producers of  i Non-EU final marketEU final market “Everything But Arms” “siblings” in sector i

Data and Results Universe of Bangladeshi garment manufacturers ( ) Positive effects on domestic firm performance (for many measures) with FDI presence served by domestic intermediate good producers

Strengths of paper Rich and detailed data set Very careful and appropriate econometrics Wide range of different specification with consistent results for various measures of firm performance – True for domestic firms that do not export to EU

Suggestions Current ii FDI i Domestic i

Suggestions ii FDI i Domestic k kk For i k

Suggestions ii FDI i Domestic i not involved in exports

Unfair “complaint” – Careful empirics  Narrow lesson FDI in other countries? FDI in other Bangladeshi industries?