Avenues of Technology Transfer: Foreign Investment and Productivity Change in the Czech Republic

Simeon Djankov and Bernard Hoekman

No 1883, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Firm-level data for the Czech Republic during 1992–6 suggest that foreign investment has tended to flow to firms of above average size, initial profitability and initial labour productivity. After controlling for this selection bias, we find that foreign investment has a positive, but statistically insignificant, impact on TFP growth. This is surprising, given that there is a presumption that foreign investors should be transferring new technologies and knowledge to partner firms. Spillovers associated with a foreign investment presence in an industry are found to be negatively correlated with domestic firm performance, while imports are found to have a significant positive effect on TFP growth of such firms. We conclude that trade (imports) appears to have played an important role as a channel for improved performance of Czech enterprises.

Keywords: Czech Republic; Foreign Investment; Technology Transfer (search for similar items in EconPapers)
JEL-codes: D24 F14 O52 P31 (search for similar items in EconPapers)
Date: 1998-05
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