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

22 Pages Posted: 6 Aug 1998

See all articles by Simeon Djankov

Simeon Djankov

London School of Economics & Political Science (LSE); Peter G. Peterson Institute for International Economics

Bernard Hoekman

Robert Schuman Centre for Advanced Studies; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); Centre for Economic Policy Research (CEPR)

Date Written: March 4, 1998

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 labor 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.

JEL Classification: D24, F14, 052, P31

Suggested Citation

Djankov, Simeon and Hoekman, Bernard and Hoekman, Bernard, Avenues of Technology Transfer: Foreign Investment and Productivity Change in the Czech Republic (March 4, 1998). Available at SSRN: https://ssrn.com/abstract=109789 or http://dx.doi.org/10.2139/ssrn.109789

Simeon Djankov (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Bernard Hoekman

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Robert Schuman Centre for Advanced Studies ( email )

Fiesole, Tuscany
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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