PUBLICATIONS & REPORTS

Contents Introduction

Using data on medium-large manufacturing plants from the industrial census for 2000 and sample surveys for 2001-2004, this paper asks whether the extent of foreign multinational enterprise (MNE) presence in an industry affects the energy efficiency of local Malaysian plants. At the industry level, correlations between MNE shares of labor or output and local plant energy intensities were negative but rather weak. Plant-level econometric estimates indicate that correlations of MNE shares to local plant energy intensities were more often negative than positive, after accounting for other factor usage and technical characteristics of plants. However, these results vary greatly depending upon on the sample of industries examined, the econometric estimation technique used, whether MNE shares are measured in terms of labor or output, and the level of aggregation used when defining MNE shares. If fixed effects estimators (the most common methodology in the recent literature) are used, most of the spillover coefficients are insignificant, and most of the relatively few significant coefficients are positive. Thus, it is probably best to conclude that evidence of intra-industry, energy intensity spillovers from MNE presence is rather weak.