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Foreign Direct Investment and Productivity of Firms

Author

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  • Martin Jarolím

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.

Suggested Citation

  • Martin Jarolím, 2000. "Foreign Direct Investment and Productivity of Firms," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 50(9), pages 478-487, September.
  • Handle: RePEc:fau:fauart:v:50:y:2000:i:9:p:478-487
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    File URL: http://journal.fsv.cuni.cz/mag/article/show/id/610
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    Cited by:

    1. Stepan Jurajda & Juraj Stancik, 2012. "Foreign Ownership and Corporate Performance: The Czech Republic at EU Entry," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 62(4), pages 306-324, August.

    More about this item

    Keywords

    foreign direct investment; total factor productivity; spillover effect;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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