controlling for more country- and firm-level factors, and employing a resampling technique to ensure that the sample accurately reflects the population.

Wagle (2010) investigates the effects of regulation on FDI and concludes that FDI-increasing regulations prompt beneficiary firms to grow more quickly, through either selection effects or knowledge transfers.<sup>11</sup> We test for these effects using business environment variables.

Burda and Hunt (2001) take a different approach, investigating the effects on productivity when countries integrate their economies. They find evidence that less productive members of economic unions benefit from productivity transfers from their partners.<sup>12</sup> Winston (1993), Harrison (1994), and Meyer and Vickers (1997) suggest that integration improves productivity growth by increasing competition. This competition leads to the expectation of convergence. This paper considers both integration and international affiliations.

In this paper, we test for the effects of firm size, age, and ownership structure on laborproductivity growth.<sup>13</sup> Dunne, Roberts, and Samuelson (1989), using a dataset including 200,000 U.S. manufacturing firms from 1967–1977, find that size is negatively correlated with growth, and that the expected growth rate of a firm declines with size for firms owned by single-plant firms, but increases with size for firms owned by multi-plant firms, suggesting synergies from FDI. The importance of FDI for growth is a persistent result throughout the literature,<sup>14</sup> and one further supported by our findings.

The research most similar to that presented in this paper is the work of Anos Casero and Udomsaph (2009). The authors show a direct correlation between productivity growth and the quality of institutions and government policies. They also use the Amadeus dataset and employ principal component analysis to determine the business environment. However, their analysis covers only eight European countries, and their sample is somehow biased by the data availability in Amadeus.<sup>15</sup> We improve on this by using resampling techniques and a larger universe of countries and firms.

This paper offers several novel additions to the literature. The Amadeus database is used in conjunction with a resampling technique to represent the underlying population and generate a representative, cross-country sample. By combining firm-, industry-, and country-level variables

> Scarpetta (2003) also measure MFP but use industry-level information, while Conway et al. (2006) use industrylevel data but measure labor productivity growth. All of these studies rely on OECD country samples. 11 For more on FDI and growth, see Barba Navaretti and Venables (2004), Bernard and Jensen (1995), and Vogel and Wagner (2009).

> 12 Specifically, Burda and Hunt (2001) suggest five mechanisms for productivity transfers: (1) capital accumulation, (2) migration, (3) FDI, (4) Hecksher-Ohlin factor price equalization, and (5) knowledge/technology spillovers. See also Ackerlof et al. (1991).

> 13 There has been considerable disagreement among studies as to the causes of productivity growth. On one hand, using a panel of fourteen OECD countries for 1970–1987, Bernard and Jones (1993) find growth in total factor productivity (TFP) due to within-firm technological improvement and capital accumulation. Olley and Pakes (1996) and Restuccia and Rogerson (2007), on the other hand, find that productivity gains are primarily the result of reallocation of resources to high-productivity firms from low. Still other studies have found net entry to be the most influential motor.

14 Wagner (2011) suggests several pathways by which firms may benefit from inward FDI, including knowledge transfers and spillover effects. See Smarzynska Javorcik (2004) for growth effect from outward FDI; Barba Navaretti and Venables (2004) for a survey of empirical studies on productivity differences between foreign owned firms and domestic firms.

> 15 Over half of the firms included into the sample are from Romania.

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