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.
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Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number
2009-02.
Find related papers by JEL classification: P45 - Economic Systems - - Other Economic Systems - - - International Linkages P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
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