Productivity Spillovers from Foreign Direct Investment in Developing Countries: A Meta-Regression Analysis

Abstract:     
This paper reviews the empirical literature on technology spillovers from foreign direct investment (FDI) in developing countries. The sample includes 32 studies that model the contribution of FDI presence to local productivity in the host country through spillover effects such as those associated with technology transfer and superior managerial know-how. In our quantitative meta-analysis, study estimates of spillover effects are regressed on a number of study characteristics in order to determine what aspects of study design and data characteristics explain the magnitude, significance, and direction of spillovers from FDI. The meta-regression results suggest that spillover effects are more pronounced when studies measure the effect of FDI spillovers on output, and are more likely to be significant and positive for Asian countries. Results also highlight the possibility that the documented spillover effects from FDI in developing countries may be partly a product of model misspecification.

Keywords: Foreign Direct Investment, Spillovers, Productivity, Developing Countries

JEL Classifications: F21, F23, O1

Working Paper Series