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Not all that glitters. The direct effects of privatization through foreign investment

Author

Listed:
  • Jan Hagemejer

    () (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland)

  • Joanna Tyrowicz

    () (Faculty of Economic Sciences, University of Warsaw; National Bank of Poland; Rimini Centre for Economic Analysis)

Abstract

Although foreign subsidiaries usually perform better than the average of the hosting economies, empirical literature has also established that the selection effect is statistically significant. In this paper we attempt to evaluate its economic relevance, using a unique dataset of annual financial reports by all medium and large Polish enterprises over a period 1996-2007. We match firms privatized with the use of FDI to a control group of non-privatized state owned companies in order to disentangle the effect of self-selection and FDI entry. Evidence suggests that although FDI enters more frequently into companies who already participate in the international trading networks, roughly half of the export intensity differential may be attributed to the entry of FDI. On the other hand, selection effects seem to dominate as far as efficiency is concerned, while only towards the end of the sample the positive effect of FDI on profitability may be confirmed.

Suggested Citation

  • Jan Hagemejer & Joanna Tyrowicz, 2010. "Not all that glitters. The direct effects of privatization through foreign investment," Working Papers 2010-12, Faculty of Economic Sciences, University of Warsaw.
  • Handle: RePEc:war:wpaper:2010-12
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    File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP35.pdf
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    References listed on IDEAS

    as
    1. Peter, Klara Sabirianova & Svejnar, Jan & Terrell, Katherine, 2004. "Distance to the Efficiency Frontier and FDI Spillovers," IZA Discussion Papers 1332, Institute for the Study of Labor (IZA).
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    Cited by:

    1. repec:eee:ecosys:v:41:y:2017:i:4:p:537-568 is not listed on IDEAS
    2. repec:sgh:gosnar:y:2017:i:5:p:5-30 is not listed on IDEAS
    3. 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.
    4. Jan Hagemejer & Joanna Tyrowicz & Jan Svejnar, 2014. "Measuring the Causal Effect of Privatization on Firm Performance," Working Papers 2014-14, Faculty of Economic Sciences, University of Warsaw.
    5. El-hadj Bah & Josef C. Brada, 2014. "Labor Markets in the Transition Economies: An Overview," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 3-53, June.
    6. Jude, Cristina, 2012. "FDI, Productivity and Wages. New Evidence from a Romanian Matched Sample," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 36-55, December.

    More about this item

    Keywords

    privatization; transition; propensity score matching; firm-level analysis; Poland;

    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 and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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