An explanation that seems plausible at this point is that countries and firm within countries might differ in their ability to benefit from the presence of foreign-owned firm and their superior technology. There might be countries or industries in which the domestically owned sector is too small or unable to learn from foreign-owned firms. In those cases, the domestic sector may be crowded out by competition from the most efficient foreign-owned firms. The stat of domestically owned sector might depend not only on the stage of development of the economy, but also on the type of trade regime. A heavily protected domestically owned sector might be inefficient and lacking in entrepreneurship. It makes sense that the arrival of foreign firm with technology greatly superior to that of domestically owned firms should inflict damage on at least some domestic firm. The least efficient, perhaps often the smallest, might become unprofitable or be forced out of the industry. One might view that outcome as favorable for the host country as a whole if the average productivity of foreign-owned and domestically owned firms together increased. Few studies take account of both the exit and the entrance of new firms, both of which are important for assessing the overall impact of inward FDI.