" This study has four aims. Firstly, the study presents comparative evidence on the presence of foreign affiliates across OECD countries. Secondly, it reports the relative labour productivity of foreign affiliates across OECD countries. Thirdly, the study quantifies the contribution of foreign affiliates to labour productivity growth in OECD countries using a growth accounting approach. Fourthly, the analysis shows how much of this contribution derives from an increase in the employment share of foreign affiliates and how much from an increase in the productivity of foreign affiliates in the host country. The information is derived by matching three OECD data sources: the STAN database for industrial analysis, the AFA (Activities of Foreign Affiliates) and FATS (Foreign Affiliates in Trade and Services) databases. The study confirms that foreign affiliates are more labour productive than the average domestic firm and shows that this advantage remains after controlling for industrial composition of the foreign affiliates sector. Finally, the analysis shows that foreign affiliates can make an important contribution to labour productivity growth. The contribution is largest in the manufacturing sector. In the services sector and in low-tech manufacturing sectors, the largest component of the contribution of foreign affiliates is associated with the increased employment share of foreign affiliates. In medium- and high-tech sectors, the contribution is mainly driven by strong labour productivity growth of existing foreign affiliates. In the United States the contribution in both the manufacturing and the services sectors is consistently driven by strong labour productivity growth of existing foreign affiliates."

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