Liquidity Constraints and Firms' Linkages with Multinationals

Using a unique data set on the Czech Republic for 1994–2003, this article examines the relationship between a firm's liquidity constraints and its supply linkages with multinational corporations (MNCs). The empirical analysis indicates that Czech firms supplying multinationals are less credit constrained than are nonsuppliers. Closer inspection of the timing of the effect, however, suggests that the result is due to self-selection of less constrained firms into supplying multinationals rather than to the benefits derived from the supplying relationship. As the recent literature finds that productivity spillovers from foreign direct investment (FDI) are most likely to take place through contacts between MNCs and their local suppliers, this finding suggests that well-developed financial markets may be needed to take full advantage of the benefits associated with FDI inflows.

Bibliographic Details

Main Authors:	Javorcik, Beata S., Spatareanu, Mariana
Format:	Journal Article biblioteca
Published:	World Bank 2009-06-30
Subjects:	capital markets, company, employment, firms, foreign companies, foreign direct investment, foreign market, foreign markets, lenders, loan, local entrepreneurs, MNC, multinational, multinational corporations, multinationals, state enterprises, suppliers, taxation,
Online Access:	http://hdl.handle.net/10986/4505
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