The Presence and Effects of Foreign Multinational Firms on the Survival of Domestic Agricultural Products Export Firms in Tanzania

Abstract

This paper investigates whether and how the presence of export-oriented foreign multinational firms affects the survival of domestically owned Agri-export firms in Tanzania using the 2010 – 2020 transaction firm-level customs data. The empirical analysis is based on the life table estimator function and the logistic regression survival model with fixed effects. After controlling for firm specific characteristics such as age, size, export volume, productivity, number of destinations per firm, and number of products per firm, we find that foreign firms have higher survival rates than domestic firms and at some point, they positively influence the survival of the domestic firms in international agricultural exports. The positive impact on the domestic firms could be due to knowledge spillovers from the foreign firms.  The results also suggest that the presence of foreign-owned firms has a significant impact on the exit hazard of domestic firms. This perseverance could be due to the reasons that mostly foreign firms export to countries where they originate, sometimes they are aware to market information than local firms. Finally, the findings offer insightful implications including supporting locally owned firms with increased international markets access to information and continue improving business and investment environment for foreign multinational in agricultural exports.