Foreign Direct Investment, Information Spillover, and Export Decision: Evidence from Hungarian Firm-Level Data

in The Journal of World Investment & Trade
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Foreign Direct Investment, Information Spillover, and Export Decision: Evidence from Hungarian Firm-Level Data

in The Journal of World Investment & Trade


I Author's calculation based on the census data reported in Section 2.

The individual regions consist of the following city and counties, respectively: the capital region consists of Budapest and Pest County. The western region consists of the following nine counties: Gy8r-Moson-Sopron; Komarom-Esztergom; Vas; Veszprcm; Fejer; Zala; Somogy; Tolna and Baranya. The eastern region consists of nine counties as well: Nograd; Bacs-Kiskun; Csongrad; Bckes; Jasz-Nagykun-Szolnok; Hajdu-Bihar; Szabolcs-Szatmar- Bereg; Borsod-Abauj-Zemplen and Heves. 3 The unit used for the price data is 1,000 Huf.

4 This simple model that restricts the company managers' time horizon to one year can be easily generalized by adopting a profit function that maximizes the unlimited profit stream facing the future. For details, see Roberts and Tybout (1997) and Clerides et al. (1998). Nevertheless, the empirical model derived from a generalized theoretical model also results in the same estimation model as formula (3).

5 Petrin et al. (2004) describe a specific estimation method using econometric software. 6 According to Ackerberg et al. (2006), however, the Levinsohn-Petrin estimator may undergo collineariry problems, and, hence, there is still room for the development of the TFP estimation technique.

The dynamic bivariate dichotomous choice model can be estimated by the fixed-effects linear probability model besides the random-effects probit model propounded by Heckman (1981). However, the former is an estimation method using two terms of the lagged value of independent variables as instruments, and it is difficult to use this method with data with an insufficient length of time-series. Therefore, as in other previous studies, we apply the random-effects probit estimator to all export decision models reported in this paper.

8 Namely, the results indicate that it is less likely that foreigners cherry pick the best, most productive and profitable domestic firms, which are also more likely to export. Although the details are omitted due to space limitations, we obtained a similar result from a comparative analysis of export firms and non-export firms using the propensity score matching method practiced by Yasar and Rejesus (2005) and Wagner (2002).

y However, in our preliminary estimation work, the state ownership share did not produce a significant estimate for the manufacturing and service industries.

10 To avoid multicollinearity, four firm characteristics variables are removed from the right-hand side of the regression model with the ORG variable.

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