Direct and Indirect Effects of FDI inEmerging European Markets:A Survey and Meta-analysis

We review a large body of literature dealing with the effects of Foreign Direct Investment(FDI) on economies during their transformation from a command economic systemtoward a market system. We report the results of a meta-analysis based on the literatureon externalities from FDI. The studies on emerging European markets covered in oursurvey report direct and indirect FDI effects weakening over time, similarly as in otherFDI destination countries. This is imputable to a publication bias that is detected and tothe fact that more sophisticated methods and more controls can be used once a sufficienttime span is available. Panel studies are likely to find relatively lower spillover effects.The choice of the research design (definition of firm performance and foreign firmpresence) matters. More specific to the sampled studies is the role played by forward andbackward linkages, which dominate other channels in driving FDI externalities....