FDI forward spillover effects in emerging markets: A comparative meta-analysis of China and Eastern Europe

Abstract

Using two unique datasets of 530 forward estimates from 19 studies on China and 942 forward estimates from 28 studies on Eastern European transition economies, this study quantitatively analyzes foreign direct investment forward spillover effects, accounting for various biases and firm attributes in existing empirical results using a meta-regression analysis. We find that aggregation bias, misspecification bias, endogeneity bias (including simultaneity bias and omitted-variable bias), and publication bias, as well as firm attributes, contribute to the heterogeneity in forward spillover estimates; and that the preferred forward spillover effects are positive but nonsignificant. Interestingly, the preferred forward spillover effect is likely to be much larger in Eastern European transition economies than in China.