Foreign Investment and Domestic Productivity in the Czech Republic: A Quantitative Survey

Hampl, Mojmir and Havranek, Tomas (2018): Foreign Investment and Domestic Productivity in the Czech Republic: A Quantitative Survey.

Abstract

In this paper we take stock of the evidence concerning the effect of foreign direct investment (FDI) on the productivity of locally owned firms in the Czech Republic. To this end, we collect 332 estimates previously reported in journal articles, working papers, and PhD theses. We find that the mean reported externality arising for domestic firms due to the presence of foreign firms (the “FDI spillover”) is zero. There is no evidence of publication bias, i.e., no sign of selective reporting of results that are statistically significant and show an intuitive sign. Nevertheless, we find that the overall spillover effect is positive and large when more weight is placed on estimates that conform to best-practice methodology. Our results suggest that, as of 2018, a 10-percentage-point increase in foreign presence is likely to lift the productivity of domestic firms by 11%. The effect is even larger for joint ventures, reaching 19%.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign direct investment; productivity; spillovers; meta-analysis
• Subjects: C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology ; Computer Programs > C83 - Survey Methods ; Sampling Methods; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

References

Ayyagari, M. & R. Kosová (2010): “Does FDI Facilitate Domestic Entry? Evidence from the Czech Republic.” Review of International Economics 18(1), 14–29.

Cuaresma, J. J. Fidrmuc, & M. Hake (2014): “Demand and Supply Drivers of Foreign Currency Loans in CEECs: A Meta-Analysis.” Economic Systems 38(1), 26–42.

Damijan, J., M. Knell, B. Majcen, & Matija Rojec (2003): “Technology Transfer Through FDI in Top-10 Transition Countries: How Important Are Direct Effects, Horizontal and Vertical Spillovers?” William Davidson Institute Working Papers Series 549, William Davidson Institute at the University of Michigan.

Damijan, J., M. Rojec, B. Majcen, & M. Knell (2013): “Impact of Firm Heterogeneity on Direct and Spillover Effects of FDI: Micro-Evidence from Ten Transition Countries.” Journal of Comparative Economics 41(3), 895–922.

Feldkircher, M. & S. Zeugner (2012): “The Impact of Data Revisions on the Robustness of Growth Determinants – A Note on Determinants of Economic Growth: Will Data Tell?” Journal of Applied Econometrics 27(4), 686–694.

Fidrmuc, J. & I. Korhonen (2006): “Meta-Analysis of the Business Cycle Correlation Between the Euro Area and the CEECs.” Journal of Comparative Economics 34(3), 518–537.

Geršl, A. (2008): “Productivity, Export Performance, and Financing of the Czech Corporate Sector: The Effects of Foreign Direct Investment.” Czech Journal of Economics and Finance 58, 232–247.

Geršl, A., I. Rubene, & T. Zumer (2007): “Foreign Direct Investment and Productivity Spillovers: Updated Evidence from Central and Eastern Europe.” CNB Working Papers 2007/8, Czech National Bank, Research Department.

Hanousek, J., E. Kočenda, & M. Maurel (2011): “Direct and Indirect Effects of FDI in Emerging European Markets: A Survey and Meta-Analysis.” Economic Systems 35(3), 301–322.

Havránek, T. & Z. Iršová (2011): “Estimating Vertical Spillovers from FDI: Why Results Vary and What the True Effect Is.” Journal of International Economics 85(2), 234–244.

Havránek, T. & Z. Iršová (2012): “Survey Article: Publication Bias in the Literature on Foreign Direct Investment Spillovers.” Journal of Development Studies 48(10), 1375–1396.

Havránek, T., Z. Iršová, & K. Janda (2012): “Demand for Gasoline is More Price-Inelastic Than Commonly Thought.” Energy Economics 34(1), 201–207.

Havránek, T., Z. Iršová, & O. Zeynalova (2017): “Tuition Fees and University Enrollment: A Meta-Analysis.” Institute of Economic Studies Working Papers 2017/16, Charles University Prague, Faculty of Social Sciences.

Ioannidis, J., C. Doucouliagos, & T. Stanley (2017): “The Power of Bias in Economics Research.” Economic Journal 127, F236–F265.

Iršová, Z. & T. Havránek (2013): “Determinants of Horizontal Spillovers from FDI: Evidence from a Large Meta-Analysis.” World Development 42(C), 1–15.

Iwasaki, I. & M. Tokunaga (2016): “Technology Transfer and Spillovers from FDI in Transition Economies: A Meta-Analysis.” Journal of Comparative Economics 44(4), 1086–1114.

Iwasaki, I. & E. Kočenda (2017): “Are Some Owners Better Than Others in Czech Privatized Firms? Even Meta-Analysis Can’t Make Us Perfectly Sure.” Economic Systems 41(4), 537-568.

Kosová, R. (2010): “Do Foreign Firms Crowd Out Domestic Firms? Evidence from the Czech Republic.” Review of Economics and Statistics 92(4), 861–881.

Pavlínek, P. & P. Žížalová (2016): “Linkages and Spillovers in Global Production Networks: Firm-Level Analysis of the Czech Automotive Industry.” Journal of Economic Geography 16(2), 331–363.

Raftery, A., D. Madigan, & J. Hoeting (1997): “Bayesian Model Averaging for Linear Regression Models.” Journal of the American Statistical Association 92, 179–191.

Stančík, J. (2007): “Horizontal and Vertical FDI Spillovers: Recent Evidence from the Czech Republic.” CERGE-EI Working Papers 340, Center for Economic Research and Graduate Education – Economics Institute, Prague.

Stančík, J. (2009): “FDI Spillovers in the Czech Republic: Takeovers vs. Greenfields.” European Economy – Economic Papers 2008–2015 369, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.

Vacek, P. (2007): “Productivity Spillovers from Foreign Direct Investment: Industry-Level Analysis.” In “Essays on International Productivity Spillovers,” Ph.D. thesis, Cornell University.

Vacek, P. (2010): “Productivity Gains from Exporting: Do Export Destinations Matter?” Institute of Economic Studies Working Papers 2010/18, Charles University Prague, Faculty of Social Sciences.