The Value of Diversity: Foreign Direct Investment and Employment in Central Europe During Economic Recovery
We examine the role of FDI in job creation and job preservation as well as their role in changing the structure of employment. Our analysis refers to Czech Republic, Hungary, Slovakia and Estonia. We present descriptive stage model of FDI progression into transition economy. Employment aspects of the model are next analysed. We conclude that the role of FDI in employment creation/preservation has been most successful in Hungary and than in Estonia. Yet, FDI can operate as complement rather than as substitute in employment generation/preservation. The paper shows that the increasing differences in sectoral distribution of FDI employment across countries are closely related to FDI inflows per capita. The bigger diversity of types of FDI is more favourable for the host economy. There is higher likelihood that it will lead to more diverse types of spillovers and skill transfers. If policy is unable to maximise the scale of FDI inflows than policy makers should focus much more on attracting diverse types of FDI.
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