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Foreign Direct Investments in Business Services: Transforming the Visegrád Four Region into a Knowledge-based Economy?

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  • Paweł Capik
  • Jan Drahokoupil

Abstract

Foreign direct investments (FDIs) in the service sector are widely attributed an important role in bringing more skill-intensive activities into the Visegrád Four (V4). This region—comprising Poland, the Czech Republic, Hungary and Slovakia—relied heavily on FDIs in manufacturing, which was often found to generate activities with limited skill content. This contribution deconstructs the chaotic concept of “business services” by analysing the actual nature of service sector activities outsourced and offshored to the V4. Using the knowledge-based economy (KBE) as a benchmark, the paper assesses the potential of service sector outsourcing in contributing to regional competitiveness by increasing the innovative capacity. It also discusses the role of state policies towards service sector FDI (SFDI). The analysis combines data obtained from case studies undertaken in service sector outsourcing projects in V4 countries. Moreover, it draws on interviews with senior employees of investment promotion agencies and publicly available data and statistics on activities within the service sector in the region. It argues that the recent inward investments in business services in the V4 mainly utilize existing local human-capital resources, and their contribution to the development of the KBE is limited to employment creation and demand for skilled labour.

Suggested Citation

  • Paweł Capik & Jan Drahokoupil, 2010. "Foreign Direct Investments in Business Services: Transforming the Visegrád Four Region into a Knowledge-based Economy?," European Planning Studies, Taylor & Francis Journals, vol. 19(9), pages 1611-1631, November.
    • Handle: RePEc:taf:eurpls:v:19:y:2010:i:9:p:1611-1631
    DOI: 10.1080/09654313.2011.586181
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    References listed on IDEAS

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    1. John H. Dunning & Sarianna M. Lundan, 2008. "Multinational Enterprises and the Global Economy, Second Edition," Books, Edward Elgar Publishing, number 3215.
    2. Sanjaya Lall, 2013. "Reinventing Industrial Strategy: The Role Of Government Policy In Building Industrial Competitiveness," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 785-829, November.
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