Firm heterogeneity and development: A meta-analysis of FDI productivity spillovers

Abstract

We analyse the rich literature on FDI spillovers analysing econometric studies published over 1983–2010 and dealing with national studies in 30 developing countries and emerging markets. We find that these studies ignore two sources of heterogeneity: exports and – especially – R&D. Our meta-analysis corrects for differences in research design (including regional effects, sample size and level of aggregation). We observe positive and significant effects for heterogeneity in terms of labour quality, size and export. This robustness contrasts with contradictory findings for foreign ownership where 63% of the coefficients are insignificant or negative.

JEL Classification:

• F21, F23, O12

Acknowledgements

A preliminary version was presented at the ‘Firm Heterogeneity and Development’ conference, Utrecht University October 2011. We thank anonymous referees and participants of the conference for their comments in particular Jean-Marie Viaene and Jacob Jordaan. Mebratie acknowledges the financial support of the Netherlands Organisation for Scientific Research (NWO-WOTRO), grant number W07.45.103.00.

Notes

Source: own computation based on 30 previous studies about the spillover effect of FDI.

Note: Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, *p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Note: Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Note: Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Note: Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Note: Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

Robust standard errors in parentheses, *** p < 0.01, ** p < 0.05, * p < 0.1.

Source: Own estimation based on data collected from empirical studies about FDI spillovers.

1. We owe this point to Jean-Marie Viaene from the preliminary version of the paper which was presented at Firm Heterogeneity and Development Conference, Utrecht University, October 2011.

2. Fixed and random effect models for meta-analysis refer to assumptions regarding heterogeneity of the effect estimates and not to the common assumptions of variation across time and region in panel data studies (Diebel and Wooster 2010).

3. The article by Field (2003) also describes further problems in using fixed-effects models on random-effects data.

4. The absolute value of t-statistics is used since the paper aims at explaining the study characteristics which influence the magnitude of statistical values and not on the direction or sign of the effect.

5. We owe this point to Jacob Jordaan from the preliminary version of the paper which was presented at Firm Heterogeneity and Development Conference, Utrecht University, October 2011.

6. Only nine papers in our sample control for export and seven analyse the effect of R&D investment so that a meaningful analysis is not possible for these aspects of heterogeneity.