A metaâ€ analysis of the indirect impact of foreign direct investment in old and new EU member states: Understanding productivity spillovers
Randolph Bruno () and
Maria Cipollina ()
The World Economy, 2018, vol. 41, issue 5, 1342-1377
In this paper, we summarise, combine and explain recent findings from firmâ€ 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 FDIâ€“productivity relationship. Taking advantage of large number of highâ€ quality studies on FDI and its role in explaining the growth in firmsâ€™ productivity in Europe, we adopt recent metaâ€ regression analysis methodsâ€”funnel asymmetry and precision estimate tests and precisionâ€ effect estimate with standard errorsâ€”to explain the heterogeneous impact of FDI. This paper assesses the countryâ€ specific impact of FDI on firmsâ€™ performance, after taking publication selection bias, econometric modelling and the individual studiesâ€™ 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.
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