Multinationales as Stabilizers? Economic Crisis, Access to Finance, and Employment Growth

This paper examines the comparative response of multinationals and domestic firms to an economic crisis, using the empirical setting of a well defined case of economic slowdown in Chile. We find that employment in manufacturing plants has been drastically reduced during the economic crisis. Our findings reveal that multinationals are more likely to exit contributing to the employment contraction during the crisis, but surviving foreign firms experience lower employment reductions than domestic enterprises. These results are not fully consistent with idea that multinationals are less affected by an economic crisis and that they may be able to act as stabilizers.