Impact of foreign direct investment on the restructuring and growth in manufacturing

Abstract

Nation-wide firm-level data are used for the time series and cross-section analysis of foreign direct investment in manufacturing on 2digit and 3digit industries. Dynamics of foreign investment enterprises (FIEs) are computed for the period 1993-1996. The performance of FIEs is compared with the domestic enterprises. Related policy issues ere discussed. <p>Although the share of foreign investment enterprises in the total manufacturing output doubled during the period 1993-96, with 23 % remains relatively low in comparison with Hungary where the respective share in output reached 67 % by 1996. Foreign penetration via equity ownership is low in the industries with excess capacities end need for extensive restructuring such as steel industry or large machinery, chemicals, coke end refinery. Allocation pattern of FIEs differs from domestic enterprises. Foreign investment is more specialised and concentrated than domestic enterprises.

The Czech economic transition

“…28 28 Zemplinerova (1998) confirms that, in the Czech case also, firms with foreign participation are more export‐oriented than domestically‐owned firms. …”

The importance of foreign direct investment for South East European countries' agriculture

“…Also there is broad literature concerning the FDI impacts on transition SEE or CEE economies. For example, Zemplinerová (1998) analyzes and compares the share of both foreign investment enterprises and domestic enterprises in total manufacturing output, allocation pattern, specialization and concentration; Hunya examines FDI impacts on competitiveness (Hunya, 2000) and on growth and restructuring in Central European transition countries (Hunya, 2002); while Kalotay (2010) Further elaboration of the initial hypothesis leads us to the opinion that if FDI might bring improvements in countries' economies, FDI might also bring improvements in agriculture. A number of studies show the importance of FDI for a country's agriculture.…”

FDI: Source of financing or source of trade for CEE

“…The liberalization of investment flows to CEE twenty years ago, the progress in transition and the increase of FDI inflows to CEE attracted the attention of the researchers and resulted in numerous papers. Zemplinerová [48] compared foreign investment enterprises with domestic enterprises, analyzing the share in total manufacturing output, allocation pattern, specialization and concentration. Hunya discussed the FDI situation in South East European countries and made recommendations for these countries based on Central European countries experience [16], and also examined the competitiveness impacts of FDI [17], the question of restructuring through FDI [18], FDI impacts on growth and restructuring in Central European transition countries [19], manufacturing FDI in new EU member states [20] and FDI of Baltic states [21] and also different aspects of FDI database in Central, East and Southeast Europe [22], [23], [24], [25].…”