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Foreign Capital and Domestic Productivity in the Czech Republic

Author

Listed:
  • Mojmir Hampl

    (Czech National Bank, Na prikope 28, 115 03 Prague 1, Czech Republic)

  • Tomas Havranek

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic
    Czech National Bank, Na prikope 28, 115 03 Prague 1, Czech Republic)

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%.

Suggested Citation

  • Mojmir Hampl & Tomas Havranek, 2018. "Foreign Capital and Domestic Productivity in the Czech Republic," Working Papers IES 2018/12, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2018.
    • Handle: RePEc:fau:wpaper:wp2018_12
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    References listed on IDEAS

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    1. Pavel Vacek, 2010. "Panel Data Evidence on Productivity Spillovers from Foreign Direct Investment: Firm-Level Measures of Backward and Forward Linkages," Working Papers IES 2010/19, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2010.
    2. Martin Feldkircher & Stefan 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, John Wiley & Sons, Ltd., vol. 27(4), pages 686-694, June.
    3. Iwasaki, Ichiro & Tokunaga, Masahiro, 2016. "Technology transfer and spillovers from FDI in transition economies: A meta-analysis," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 1086-1114.
    4. Hanousek, Jan & Kocenda, Evzen & Maurel, Mathilde, 2011. "Direct and indirect effects of FDI in emerging European markets: A survey and meta-analysis," Economic Systems, Elsevier, vol. 35(3), pages 301-322, September.
    5. Joze P. Damijan & Mark Knell & Boris 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.
    6. Iwasaki, Ichiro & Kočenda, Evžen, 2017. "Are some owners better than others in Czech privatized firms? Even meta-analysis can’t make us perfectly sure," Economic Systems, Elsevier, vol. 41(4), pages 537-568.
    7. Tomas Havranek & Zuzana Irsova & Olesia Zeynalova, 2017. "Tuition Fees and University Enrollment: A Meta-Analysis," Working Papers IES 2017/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Aug 2017.
    8. Damijan, Jože P. & Rojec, Matija & Majcen, Boris & Knell, Mark, 2013. "Impact of firm heterogeneity on direct and spillover effects of FDI: Micro-evidence from ten transition countries," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 895-922.
    9. Havranek, Tomas & Irsova, Zuzana & Janda, Karel, 2012. "Demand for gasoline is more price-inelastic than commonly thought," Energy Economics, Elsevier, vol. 34(1), pages 201-207.
    10. Fidrmuc, Jarko & Korhonen, Iikka, 2006. "Meta-analysis of the business cycle correlation between the euro area and the CEECs," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 518-537, September.
    11. John P. A. Ioannidis & T. D. Stanley & Hristos Doucouliagos, 2017. "The Power of Bias in Economics Research," Economic Journal, Royal Economic Society, vol. 127(605), pages 236-265, October.
    12. Crespo Cuaresma, Jesús & Fidrmuc, Jarko & Hake, Mariya, 2014. "Demand and supply drivers of foreign currency loans in CEECs: A meta-analysis," Economic Systems, Elsevier, vol. 38(1), pages 26-42.
    13. Adam Gersl & Ieva Rubene & Tina Zumer, 2007. "Foreign Direct Investment and Productivity Spillovers: Updated Evidence from Central and Eastern Europe," Working Papers 2007/8, Czech National Bank.
    14. Meghana Ayyagari & Renáta Kosová, 2010. "Does FDI Facilitate Domestic Entry? Evidence from the Czech Republic," Review of International Economics, Wiley Blackwell, vol. 18(1), pages 14-29, February.
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    Cited by:

    1. Tomas Havranek & Anna Sokolova, 2020. "Do Consumers Really Follow a Rule of Thumb? Three Thousand Estimates from 144 Studies Say 'Probably Not'," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 97-122, January.

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    More about this item

    Keywords

    Foreign direct investment; productivity; spillovers; meta-analysis;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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