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

Tomas Havranek () and Zuzana Irsova ()

No wp996, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: The principal argument for subsidizing foreign investment, especially in developing and transition economies, 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 generated by investors that come from distant countries and that have only slight technological advantages over local firms. In addition, greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade.

Keywords: Foreign direct investment; Productivity; Spillovers; Meta-analysis; Publication selection bias (search for similar items in EconPapers)
JEL-codes: C42 F23 (search for similar items in EconPapers)
Pages: pages
Date: 2010-06-01
New Economics Papers: this item is included in nep-eff and nep-int
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Citations: View citations in EconPapers (10) Track citations by RSS feed

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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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