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Increasing role of foreign capital in Polish economy since 1993

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  • Pawlik, Konrad

    () (Department of Organisation and Management, Aarhus School of Business)

Abstract

The regional integration and increasing role of the Central European Countries in globalization processes raised the question of foreign direct investments inflow and its role in these Economies. Poland, the first country that launched radical reforms and the largest country that joined recently the European Union, pays special attention of the researchers in international economics and business. This paper is introductory article opening up dissertation on technology transfer and absorption to foreign affiliates in Poland in the years: 1993-2002. The paper carries out an analysis of foreign companies and its role in different industries with regard to ownership control, performance, and technology: transfer, absorption and complexity. The entire results are aggregated and confronted in the comparative analysis with domestic private- and public- companies. The results confirm significant increase of foreign control over their affiliates as well as the Polish market in general. This implies larger amount of new greenfield investments that are mostly wholly owned subsidiaries as well as using knowledge based view or transaction cost argumentation that there is increasing transfer of tacit knowledge. Foreign companies invest more and implement more advanced technical solutions than their domestic counterparts. Labour productivity and compensation per employee are higher in foreign companies than in domestic firms, suggesting that employees in foreign affiliates are more efficient, improving and absorbing new skills. Trends for profitability are similar for domestic private companies, however foreign companies have the profits trend line flatter. Foreign and intra-industry affiliates trade figures suggest growth in both aspects. The results presented in this paper have clear policy implications for targeting of promotion activities to attract FDI into Transition economies. Moreover, the paper open up the research ”box” for more profound econometrical analysis that will be continued in the incoming dissertational articles.

Suggested Citation

  • Pawlik, Konrad, 2005. "Increasing role of foreign capital in Polish economy since 1993," Working Papers 2005-4, University of Aarhus, Aarhus School of Business, Department of Management.
  • Handle: RePEc:hhb:aardom:2005_004
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    Keywords

    Foreign capital; FDI; Polish Economy; technology; R&D activity; innovation;

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