Productivity and technology in Nepal:: An analysis of foreign and domestic firms

This study uses plant level data from the census of manufacturing establishments to examine the production technology and labor productivity of foreign and domestic firms in Nepal. The results show that the capital intensity in foreign firms is higher than that in domestic firms. The statistical results also imply that foreign firms have higher labor productivity. A simultaneous equation model suggests that foreign firms are technically not more efficient than domestic firms. In fact, analysis indicates that foreign firms are technically less efficient. The foreign firms may have derived their competitiveness from capital intensive technology that is found to be one of the major factors to boost labor productivity.