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Which Foreigners Are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI

Tomas Havranek () and Zuzana Irsova ()

Working Papers from Czech National Bank

Abstract: The principal argument for subsidizing foreign investment is the assumed spillover of technology to local firms. Yet researchers report mixed results on spillovers. To examine the phenomenon in a systematic way, we collected 3,626 estimates from 57 empirical studies on between-sector spillovers and reviewed the literature quantitatively. Our results indicate that model misspecifications reduce the reported estimates, but that journals select relatively large estimates for publication. The underlying spillover to suppliers is positive and economically significant, whereas the spillover to buyers is insignificant. Greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade. Greater spillovers are generated by investors that come from distant countries and that have only slight technological advantages over local firms.

Keywords: Foreign direct investment; meta-analysis; productivity; publication selection bias; spillovers. (search for similar items in EconPapers)
JEL-codes: C83 F23 (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in nep-int
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Working Paper: Which Foreigners Are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI (2010) Downloads
Working Paper: Which Foreigners are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI (2010) Downloads
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