A number of studies have found that foreign direct investment (FDI) can have positive impacts on productivity. However, while FDI has clearly positive impacts on technology transfers, its effects on resource use within firms is less clear and, in principle, efficiency losses might offset some of the productivity gains associated with improved technologies. In this paper, we study the impacts of FDI on efficiency in Swedish manufacturing. We find that foreign ownership has positive impacts on efficiency, supporting the earlier findings on productivity.
Keywords: Efficiency; Foreign direct investment; Manufacturing; Stochastic frontier analysis; Sweden.