FDI, structural change and productivity growth: global supply chains at work in Central and Eastern European countries

Joze Damijan, Crt Kostevc and Matija Rojec

No 3, IRMO Occasional Papers from Institute for Development and International Relations, Zagreb

Abstract: This paper empirically accounts for the importance of the 'global supply chains' concept for export restructuring and productivity growth in Central and Eastern European Countries (CEECs) in the period 1995-2007. Using industry-level data and accounting for technology intensity, we show that FDI has significantly contributed to export restructuring in the CEECs. The effects of FDI are, however, heterogeneous across countries. While more advanced core CEECs succeeded in boosting exports in higher-end technology industries, non-core CEECs stuck with export specialization in lower-end technology industries. This suggests that question towards which industries FDI flows have been directed, is of key importance. Our results show that export restructuring and economic specialization brought about by FDI during the last two decades in the CEECs might matter a lot for their potential for long-run productivity growth. Industries of higher-end technology intensity have experienced substantially higher productivity growth and so countries have been more successful in attracting FDI to these industries.

Keywords: trading agreements; developing countries; economic reforms (search for similar items in EconPapers)
JEL-codes: F21 F23 L60 O14 (search for similar items in EconPapers)
Pages: 30 pages
New Economics Papers: this item is included in nep-eff, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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