The links between firm-level productivity and modes of international expansion of firms from the Lodz Voivodeship

Abstract

The paper investigates the link between firm-level productivity and internationalisation (through exports, imports and foreign direct investment (F.D.I.)) in the Lodz Voivodeship, Poland. The Olley-Pakes algorithm was used to estimate firm-level productivity. Two hypotheses were then tested -self-selection hypothesis (stating that internationalisation is only possible at sufficiently high productivity levels) and learning hypothesis (claiming that engaging in international activity facilitates productivity growth). It has been found that productivity may affect firms' decisions about engaging in import and F.D.I., while there is no evidence of such an effect regarding exports. At the same time, there is no proof for learning, suggesting that within the timeframe of the analysis firms from the Lodz Voivodeship did not experience productivity gains due to international trade or investment.

Foreign direct investment‐firm productivity nexus in West Africa: New empirical insights from firm level data

“…With respect to specific effect on local firms, Orlic et al (2018) reveal that local manufacturing firms in European transition countries benefit from the presence of foreign firms in upstream services, especially in the knowledge intensive services. Gabrielczak and Serwach (2018) however could not find any proof for learning in Poland suggesting that within the timeframe of the analysis firms from the study did not experience productivity gains due to international investment. There are thus positions in extant literature suggesting that there could actually be conditionality in fully reaping the benefits of FDI.…”