Is the Impact Really That High? The Effect of FDI in Transition

Jan Hagemejer and Joanna Tyrowicz

No 2009-02, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: Literature is not clear on the effect of FDI on the economic performance in hosting countries. The analysed effects include productivity, propensity to export, access to financial markets, etc. Although foreign subsidiaries usually perform better than the average of the hosting economies, sometimes the selection effect is found to be considerable. In this paper we use a unique dataset based on accounting annual reports to the statistical authorities by all medium and large Polish enterprises over a period 1997-2006. We apply a propensity score matching technique to disentangle the effect of self-selection and FDI entry (treatment). We also distinguish explicitly between foreign ownership and privatisation through a foreign investor. We find strong support of the view that foreign ownership increases access to financing. Evidence suggests also that although FDI enters more frequently companies who already participate in the international trading networks, 20% of the export intensity may be consistently attributed to the treatment effect. On the other hand, we were not able to confirm large effects on efficiency, nor in the case of rentability, while the sizes of the effects are different for greenfield and private acquisitions as opposed to privatisation.

Keywords: FDI; transition; propensity score matching (search for similar items in EconPapers)
JEL-codes: C14 O16 P45 P52 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009
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Downloads: (external link)
http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP12.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: Is the effect really so large? Firm‐level evidence on the role of FDI in a transition economy-super-1 (2012)
Working Paper: Is the Impact Really That High? The Effect of FDI in Transition (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2009-02

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