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Volume 50, Issue 9


Foreign Direct Investment and Productivity of Firms

JarolĂ­m, Martin

Year: 2000   Volume: 50   Issue: 9   Pages: 478-487

Abstract: This paper analyzes the role foreign direct investment (FDI) played in the economic transition of the Czech Republic in the period 1993-1998, specifically in the Czech manufacturing. The author uses a firm-level data set supplied by Czech manufacturing industry during these years. FDI?s impact on manufacturing firms? total factor productivity growth is examined, and the author analyzes the spillover effect of FDI on the performances of firms in other sectors associated with foreign investment. The results suggest that firms with foreign participation achieved higher productivity growth rates than domestically owned firms in the period under study. Among firms with foreign participation, ?green-field? enterprises performed slightly better in terms of total factor productivity growth than firms created through mergers and acquisitions. FDI?s spillover effect, however, is found to be statistically insignificant, which does not support the hypothesis that foreign presence positively affects the productivity growth of domestically owned firms.

JEL classification: F23; L60; D24

Keywords: foreign direct investment; total factor productivity; spillover effect


RePEc: n/a

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