Voluminous studies have examined the relationship between foreign ownership and firm productivity. Two general patterns emerge at the empirical level: they are essentially correlational and results are mixed. This paper estimates the causal effect of foreign presence on a variety of productivity measures. We rely on a selection on observables approach based on the idea that all variables that influence foreign ownership status and firm productivity are fully captured by the available control

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... iables, eliminating the problem of selection bias. Using firm-level data from three ASEAN countries, the study finds that productivity of foreign-owned firms is consistently above that of domestically-owned firms regardless of different productivity measures and types of matching algorithms. This result suggests to a large extent the benefits of foreign participation in the economy.