Foreign Owned Companies and the Impacts of their Externalities on Domestic Sector and its Productivity
|Author:||Mgr. Jan Dittrich|
|Year:||2003 - summer|
|Leaders:|| doc. Ing. Vladimír Benáček CSc.
|Work type:|| Economic Policy
|Awards and prizes:|
|Abstract:||Many governments offer significant incentives to attract foreign investments, motivated by the expectation of spillover benefits. The aim of this thesis is to contribute to develop framework of both technological and linkage externalities from multinational companies (MNC) on domestic sector and its productivity. Thesis begins by reviewing possible sources of spillovers. Productivity of domestic firms can be affected by MNC in different ways -- by training workers and managers who can be next available for domestic companies, by demonstrating feasibility of new technologies, transferring know-how, providing technical assistance, creating demand for local inputs, increasing competitive pressures and possibility for specialization. Foreign presence may even negatively affect productivity of local firms, particularly in short run, causing them to cut production and reduce their efficiency, increase their costs etc. In the next part the presence of MNC in Czech economy is reviewed from several aspects. We conclude that MNC play more and more important task in Czech economy, measured in production, employment and efficiency as well. In final chapter, the total factor productivity of Czech domestic owned companies (DC) is analyzed sectorally and confronted with MNC's TFP. We have found that there is no evidence of divergence of TFP in both groups. Using industry-level data, TFP growth of DC is regressed on several factors with main conclusion that foreign presence doesn't affect negatively development of DC, although we are not able to conclude, that this is due the effect of positive spillovers from MNC.|