Quantifying productivity gains from foreign investment

We revisit the relationship between foreign investment and productivity of acquired firms. First, we construct a panel firm-level dataset for eight advanced European countries covering domestic acquisitions together with detailed balance sheet information years 1999–2012. Second, address challenge identifying causal relation. To that end, compare to in addition accounting impact majority versus minority after controlling country sector trends. The affiliates increases modestly four years, but only when stakes are by foreigners. Our results driven not divestment.