Spillovers from Foreign Direct Investment: A Meta Analysis

Abstract

The extensive empirical literature analyzing productivity spillovers from foreign direct investment to local firms provides inconclusive results. Some studies find that foreign presence has a positive impact on the productivity of domestic firms, while others find no evidence or a negative effect. Differences in the results may be attributable to contexts, such as the structural differences between developed, developing and transition economies. However, results may also vary due to different empirical methodologies, notably the use of aggregate versus firm-level data and cross-section versus panel data analysis. We conduct a meta-analysis to investigate reasons for these conflicting results, and provide a revised interpretation of earlier research and its policy implications, and new priorities for future research. Our analysis suggests that the hypothesized spillovers are not confirmed for industrialized countries in the 1990s. Transition economies may experience spillovers, but these have been declining in recent years.

Meta-Analysis of Intra-Industry FDI Spillovers: Updated Evidence

“…A substantial body of empirical literature on productivity spillovers has been published since the 1970s, and many narrative literature reviews have been conducted (see, inter alia, Pack and Saggi, 1997). The first quantitative survey, commonly called a meta-analysis, was conducted by Görg and Strobl (2001), followed by Meyer and Sinani (2005) and Wooster and Diebel (2006).…”

“…A meta-regression analyst, to be specific, collects a number of statistics from the literature -e.g., correlation coefficients or t statistics of estimates of the effect in question -and regresses them on several proxies of study design to investigate systematic dependencies (for a good introduction to the meta--regression technique, see Stanley, 2001). Concerning the meta-analyses of the spillover literature, Görg and Strobl (2001) apply ordinary least squares (OLS) meta--regression, Meyer and Sinani (2005) employ panel data methods, and Wooster and Diebel (2006) perform logistic meta-regression. We combine all the three methods and include also robust estimations to check the sensitivity of our results.…”

Southern MNCs in Switzerland and regional productivity spillovers in services/construction industry

“…Technologies have a certain firm-specific aspect to them and then need to be decoded in order to be efficiently used by local firms, raising their productivity. In addition, the wealth of local human capital contributes significantly to successfully internalising foreign technologies and enhances the knowledge base of local firms (Borensztein et al, 1998;Meyer and Sinani, 2005). Foreign affiliates are not only considered as purely technological containers of strategic assets, transferred by the parent company and other MNCs' units, but they are supposed to adopt a more technologically active behaviour, particularly, when they have been assigned the role of knowledge seekers.…”

The supply of foreign direct investment incentives: subsidy competition in an oligopolistic framework

“…As all available meta-analyses (Görg, Strobl, 2001;Meyer, Sinani, 2005;Wooster, Diebel, 2006;Havránek, Iršová, 2008) illustrate, there is no persuasive empirical evidence of technological and knowledge diffusion, which -in the form of productivity spillovers -presents the most important theoretical background for the provision of INIs. This holds especially for intra-industry spillovers, while an elaborate empirical analysis of inter-industry spillovers is only at its beginnings.…”