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Not All That Glitters

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  • Jan Hagemejer
  • Joanna Tyrowicz

Abstract

>p>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 data set of annual financial reports by all medium and large Polish enterprises over the period 1995-2007. We match firms privatized with the use of foreign direct investment (FDI) to a control group of nonprivatized state-owned companies in order to disentangle the effect of self-selection and FDI entry.>/p>>p>Evidence suggests that although FDI enters more frequently into companies that already participate in the international trading networks, roughly half 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, whereas only toward the end of the sample may the positive effect of FDI on profitability be confirmed.>/p>

Suggested Citation

  • Jan Hagemejer & Joanna Tyrowicz, 2011. "Not All That Glitters," Eastern European Economics, Taylor & Francis Journals, vol. 49(3), pages 89-111, May.
    • Handle: RePEc:mes:eaeuec:v:49:y:2011:i:3:p:89-111
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    References listed on IDEAS

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    1. Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1997. "Privatization in the United States," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 447-471, Autumn.
    2. Holger Görg & David Greenaway, 2016. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 9, pages 163-189, World Scientific Publishing Co. Pte. Ltd..
    3. Peter, Klara Sabirianova & Svejnar, Jan & Terrell, Katherine, 2004. "Distance to the Efficiency Frontier and FDI Spillovers," IZA Discussion Papers 1332, Institute of Labor Economics (IZA).
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    Cited by:

    1. 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.
    2. 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.
    3. Jan Hagemejer & Joanna Tyrowicz, 2020. "A New Instrument for Measuring the Local Causal Effect of Privatisation on Firm Performance," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 35-52.
    4. 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.
    5. 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.
    6. Svejnar, Jan & Hagemejer, Jan & Tyrowicz, Joanna, 2018. "Are Rushed Privatizations Substandard? Analyzing Firm-level Privatization under Fiscal Pressure," CEPR Discussion Papers 12991, C.E.P.R. Discussion Papers.
    7. Maciej Holko, 2017. "Oszczędności pracowników, rozwój rynku kapitału i inwestycje zagraniczne - rządowy plan rozwoju z perspektywy postkeynesowskiej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 5-30.

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    More about this item

    JEL classification:

    • P45 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - International Linkages
    • P52 - Political Economy and Comparative 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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