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A Meta-Analysis of the Robustness of Market Size and Labour Cost Determinants of FDI

Author

Listed:
  • Simona Rasciute

    () (Dept of Economics, Loughborough University)

  • Eric J Pentecost

    () (Dept of Economics, Loughborough University)

Abstract

This paper applies a meta-regression analysis to systematically summarise, integrate and synthesise the results of empirical studies that include market size and labour costs as determinants of FDI. Random effects panel estimation is employed separately for the sample of primary studies that use OLS estimation to analyse the effect of market size and labour costs on FDI and for the sample of primary studies that employ discrete choice models to estimate the effect of market size and labour costs on FDI. A number of factors related to model specifications, dataset characteristics and methodologies in the primary studies explain the variation in the estimated t-statistics of the effect of market size and labour costs on FDI across the studies. Most tests for publication bias indicate that the empirical literature on the effect of market size on FDI favours positive estimates while empirical literature on the effect of labour costs on FDI favours negative estimates. None of the literature, however, favours statistical significance.

Suggested Citation

  • Simona Rasciute & Eric J Pentecost, 2008. "A Meta-Analysis of the Robustness of Market Size and Labour Cost Determinants of FDI," Discussion Paper Series 2008_15, Department of Economics, Loughborough University, revised Dec 2008.
  • Handle: RePEc:lbo:lbowps:2008_15
    as

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    File URL: http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/META_paper_04-12-2008.pdf
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    References listed on IDEAS

    as
    1. T. D. Stanley & Stephen B. Jarrell, 2005. "Meta-Regression Analysis: A Quantitative Method of Literature Surveys," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 299-308, July.
    2. Laroche, P., 2000. "What do Unions do to Productivity? A Meta-Analysis," Papers 2000-5, Groupe de recherche en économie financière et en gestion des entreprises, Universite Nancy 2.
    3. T. D. Stanley, 2005. "Beyond Publication Bias," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 309-345, July.
    4. Anne-Célia Disdier & Keith Head, 2008. "The Puzzling Persistence of the Distance Effect on Bilateral Trade," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 37-48, February.
    5. Ashenfelter, Orley & Harmon, Colm & Oosterbeek, Hessel, 1999. "A review of estimates of the schooling/earnings relationship, with tests for publication bias," Labour Economics, Elsevier, vol. 6(4), pages 453-470, November.
    6. Gorg, Holger & Strobl, Eric, 2001. "Multinational Companies and Productivity Spillovers: A Meta-analysis," Economic Journal, Royal Economic Society, vol. 111(475), pages 723-739, November.
    7. T. D. Stanley, 2001. "Wheat from Chaff: Meta-analysis as Quantitative Literature Review," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 131-150, Summer.
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    More about this item

    Keywords

    meta-regression analysis; foreign direct investment; market size and labour costs; publication bias;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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