Foreign Direct Investment and Technology Transfer. The Case of the European Transition Countries and the Automotive Industry in the Czech Republic

Technology transfer and the so-called productivity spillover-effects are important aspects of foreign direct investments regarding their contribution to the long-term development potential of the host countries.The effects of the foreign direct investments on the foreign and domestic companies are investigated. Data of the Central- and Eastern-European countries: Hungary, Poland, the Czech Republic, Romania and Bulgaria, represented as panel data, are investigated by virtue of regression analysis. The datasets include the period from 1993 to 1999 (for Hungary from 1994 to 2000). The correlation between productivity spillovers and absorptive capacity of the firms is analyzed. Finally, the role of the Volkswagen’s investment into the Czech car manufacturer Skoda Auto and the consequent development of the Czech automotive sector are studied in details. The case study shows clearly the technology transfer to the domestic affiliate, as well as confirms the growth of the foreign sector and the wasting domestic firms.