Understanding FDI Spillover Effects: Evidence from North Macedonia

Snezhana Hristova and Dusica Stevcevska-Srbinoska
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Snezhana Hristova: University American College Skopje, Nothern Macedonia

Management, 2020, vol. 15, issue 1, 58-79

Abstract: This paper examines theoretically and empirically the spillover effects of FDIS in North Macedonia: The research focuses on the implications from business-to-business (B2B) relations between local companies and multi-national enterprises (MNES) operating in the free economic zones (TIDZ) in North Macedonia: A specially designed survey was conducted with 28 domestic companies, half of which work with the foreign companies operating in the free economic zones in North Macedonia: The statistical analysis is based on the equality tests regarding the sample mean (t-test and ANOVA) and median (Chi-square and Kruskal-Wallis test) of the above mentioned two sub-sets of data The research findings suggest that in general FDIS encourage stable connections between local companies, suppliers and customers, but do not increase the awareness of local companies about the importance of marketing for their business development. There is also insufficient empirical support for the assumption that cooperation with FDIS has significant influence on the investment decisions of the local companies, or that FDIS stimulate the search for innovative methods of production and organizational practices. Aside from the direct economic benefits from the presence of foreign companies in a host country, such as capital accumulation, increased employment rates, higher salaries, and better working conditions, it is expected that indirect effects will also occur, desirably in form of productivity spillovers, which will further enhance economic growth and development, as well as promote business environment and competitiveness. Regarding practical implications, these findings can help policymakers and company managers to recognize the different FDI spillover effects on domestic businesses’ output. Moreover, policymakers need to encourage the capability of local buyers to integrate the advanced products and services purchased from foreign firms. Furthermore, this study contributes to the existing research base in this field and represents one of the pioneer attempts in the case of RNM. The results gained from the research are very important for companies themselves, but they can also serve as a starting point for future research to eliminate governmental and other corporate issues related to the relationship between domestic and foreign businesses.

Keywords: FDI; spillover effects; business environment and competitiveness (search for similar items in EconPapers)
Date: 2020
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DOI: 10.26493/1854-4231.15.58-79

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