Firm Level Analysis of FDI and Social Development

The purpose of this paper is to explore, with the use of quantitative methods, the relationship between FDI and social development at a firm level. The study focused on obstacles to businesses associated with social development as perceived by companies with foreign capital in Central and Eastern Europe. The investigated factors mostly dealt with education and skills of workers in Central and Eastern Europe. For this purpose, an empirical study was conducted with a sample of 25,000 companies in the region of Central and Eastern Europe during 2002-2008. The empirical study showed that companies with foreign capital more often encounter difficulties associated with an insufficiently educated labour force in relation to the companies with the participation of domestic private capital. This analysis was developed to demonstrate that these companies employ workers with higher education and skilled workers more often than similar firms with ownership that is national, private or public.