A meta‐analysis of the indirect impact of foreign direct investment in old and new EU member states: Understanding productivity spillovers

Abstract

In this paper, we summarise, combine and explain recent findings from firm‐level empirical literature focusing on the indirect impact of foreign direct investment (FDI) on economic performance, measured as productivity, in the Enlarged Europe. We have reviewed 52 quantitative studies, released between 2000 and 2015 and codified 1,133 estimates. We run a regression of regressions which measures the strength of the FDI–productivity relationship. Taking advantage of large number of high‐quality studies on FDI and its role in explaining the growth in firms’ productivity in Europe, we adopt recent meta‐regression analysis methods—funnel asymmetry and precision estimate tests and precision‐effect estimate with standard errors—to explain the heterogeneous impact of FDI. This paper assesses the country‐specific impact of FDI on firms’ performance, after taking publication selection bias, econometric modelling and the individual studies’ characteristics fully into account. Our results show that on average FDI has a positive indirect impact on productivity. The impact is especially significant in selected European countries, and we interpret this as a sign of better absorptive capacities in those countries.

Visegrad economies’ active implication in a “new” EU: A new regional economic approach

“…The analysis takes into consideration the “old” and the “new” Member States. The V4 states are constant presences in this paper (Bruno & Cipollina, ).…”

The realised and unrealised benefits of the EU Single Market: current views

“…imitation, joint-ventures, training and inter-firm mobility of skilled employees, access to better production inputs, etc.). Therefore, Single Market -which is a very open and lowrisk environment for foreign direct investment-increases the firm-level productivity of even not-directly-trading companies, both in mature and catching-up economies as convincingly indicated by a very comprehensive and robust recent meta-analysis (Bruno and Cipollina, 2017).…”

“…In addition and complementarily, capital market integration keeps stimulating competition for mobile capital among countries, inducing Governments investment-friendly policies which also incentivise individuals to become skilled (Ogawa and Tsubuku, 2017). Consequently, as a recent thorough meta-analysis of empirical research finds, there has been a positive impact of cross-border direct investment on productivity, which is particularly significant in the EU (Bruno and Cipollina, 2017). Related to enhanced labour mobility and the movement of firms, the adoption and implementation of the Services Directive was a major policy effort in the movement towards genuine Single Market.…”

The impact of foreign direct investment on host country exports: A meta‐analysis

“…In the search, we employed wildcard characters to cover most of the variations of the terms. We focused mainly on the English | 3149 KASTRATOVIĆ language literature in order to maintain the homogeneity of the sample, following the approach of Bruno and Cipollina (2018) and Tokunaga and Iwasaki (2017). As the initial search resulted in 5,298 potential studies to be included in our analysis, these were filtered in a two-phase process on the basis of their relevance.…”