Productivity Spillovers from Foreign Direct Investment in Polish Manufacturing 1993-2006

Using panel data this paper examines the impact of firms with foreign capital on labor productivity of local firms in Poland. To examine productivity spillovers from foreign direct investment in Polish manufacturing I make two hypotheses: the contagion and technology gap hypothesis. The first one assumes that productivity spillovers from foreign firms to local ones increase in line with the growing share of foreign-owned firm in total production. The second one presumes that the bigger technological gaps between foreign and local firms the more intensive technology spillovers. Estimation results indicate the lack of spillovers in Polish manufacturing as a whole. Considering different groups of industries, I observe both: positive and negative productivity spillovers. The bigger technology gap between foreign and local firms is reflected in less intensive spillovers.