A Meta‐Analysis of the Indirect Impact of Foreign Direct Investment in Old and New EU Member States: Understanding Productivity Spillovers

36 Pages Posted: 10 May 2018

See all articles by Randolph Luca Bruno

Randolph Luca Bruno

UCL SSEES; Institute for the Study of Labor (IZA)

Maria Cipollina

Università degli Studi del Molise

Date Written: May 2018

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.

Keywords: enlarged Europe, firm performance, foreign direct investment, meta‐regression analysis

Suggested Citation

Bruno, Randolph Luca and Cipollina, Maria, A Meta‐Analysis of the Indirect Impact of Foreign Direct Investment in Old and New EU Member States: Understanding Productivity Spillovers (May 2018). The World Economy, Vol. 41, Issue 5, pp. 1342-1377, 2018, Available at SSRN: https://ssrn.com/abstract=3175640 or http://dx.doi.org/10.1111/twec.12587

Randolph Luca Bruno (Contact Author)

UCL SSEES ( email )

16 Taviton Street
London, WC1H 0 BW
United Kingdom

HOME PAGE: http://https://www.ucl.ac.uk/ssees/people/randolph-bruno

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Maria Cipollina

Università degli Studi del Molise ( email )

Via De Sanctis
I-86100 Campobasso, Campobasso (CB) 86100
Italy

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