Table Of ContentStudies in Economic Transition
General Editors: Jens Hölscher, Reader in Economics, University of Brighton;
andHorst Tomann, Professor of Economics, Free University Berlin
This series has been established in response to a growing demand for a greater
understanding of the transformation of economic systems. It brings together
theoretical and empirical studies on economic transition and economic devel-
opment. The post-communist transition from planned to market economies is
one of the main areas of applied theory because in this field the most dramatic
examples of change and economic dynamics can be found. The series aims to
contribute to the understanding of specific major economic changes as well as
to advance the theory of economic development. The implications of economic
policy is a major point of focus.
Titles include:
Irwin Collier, Herwig Roggemann, Oliver Scholz and Horst Tomann (editors)
WELFARE STATES IN TRANSITION
East and West
Hella Engerer
PRIVATIZATION AND ITS LIMITS IN CENTRAL AND EASTERN EUROPE
Property Rights in Transition
Hubert Gabrisch and Rüdiger Pohl (editors)
EU ENLARGEMENT AND ITS MACROECONOMIC EFFECTS IN
EASTERN EUROPE
Currencies, Prices, Investment and Competitiveness
Oleh Havrylyshyn
DIVERGENT PATHS IN POST-COMMUNIST TRANSFORMATION
Capitalism for All or Capitalism for the Few?
Jens Hölscher (editor)
FINANCIAL TURBULENCE AND CAPITAL MARKETS IN TRANSITION
COUNTRIES
Jens Hölscher and Anja Hochberg (editors)
EAST GERMANY’S ECONOMIC DEVELOPMENT SINCE UNIFICATION
Domestic and Global Aspects
Mihaela Kelemen and Monika Kostera (editors)
CRITICAL MANAGEMENT RESEARCH IN EASTERN EUROPE
Managing the Transition
Emil J. Kirchner (editor)
DECENTRALIZATION AND TRANSITION IN THE VISEGRAD
Poland, Hungary, the Czech Republic and Slovakia
Tomasz Mickiewicz
ECONOMIC TRANSITION IN CENTRAL EUROPE AND THE COMMONWEALTH
OF INDEPENDENT STATES
Julie Pellegrin
THE POLITICAL ECONOMY OF COMPETITIVENESS IN AN ENLARGED
EUROPE
Stanislav Poloucek (editor)
REFORMING THE FINANCIAL SECTOR IN CENTRAL EUROPEAN COUNTRIES
Gregg Robins
BANKING IN TRANSITION
East Germany after Unification
Johannes Stephan
ECONOMIC TRANSITION IN HUNGARY AND EAST GERMANY
Gradualism and Shock Therapy in Catch-up Development
Johannes Stephan
TECHNOLOGY TRANSFER VIA FOREIGN DIRECT INVESTMENT IN CENTRAL
AND EASTERN EUROPE
Theory, Method of Research and Empirical Evidence
Hans van Zon
THE POLITICAL ECONOMY OF INDEPENDENT UKRAINE
Adalbert Winkler (editor)
FINANCIAL DEVELOPMENT IN EASTERN EUROPE
The First Ten Years
Studies in Economic Transition
Series Standing Order ISBN 0–333–73353–3
(outside North America only)
You can receive future titles in this series as they are published by placing a standing order.
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Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke,
Hampshire RG21 6XS, England
Technology Transfer via
Foreign Direct Investment
in Central and Eastern
Europe
Theory, Method of Research and Empirical
Evidence
Edited by
Johannes Stephan
Selection and editorial matter © Johannes Stephan 2006
Individual chapters © contributors 2006
All rights reserved. No reproduction, copy or transmission of this
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this work in accordance with the Copyright, Designs and Patents Act 1988.
First published 2006 by
PALGRAVE MACMILLAN
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Companies and representatives throughout the world
PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd.
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ISBN 978-1-349-54796-8 ISBN 978-0-230-52448-4 (eBook)
DOI 10.1057/9780230524484
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managed and sustained forest sources.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Technology transfer via foreign direct investment in Central and Eastern
Europe : theory, method of research and empirical evidence / edited by
Johannes Stephan.
p. cm.
Includes bibliographical references.
1. Investments, Foreign–Europe, Eastern. 2. Investments, Foreign–Europe,
Central. 3. Technology transfer–Europe, Eastern. 4. Technology
transfer–Europe, Central. I. Stephan, Johannes, 1966–
HG5430.7.A3T43 2006
338.947′026–dc22 2006051475
10 9 8 7 6 5 4 3 2 1
15 14 13 12 11 10 09 08 07 06
Contents
List of Tables vii
List of Figures ix
Preface xi
Acknowledgements xv
Notes on the Contributors xvii
List of Abbreviations xix
Introduction xxi
Part I Theory and Review of the Latest Research on
the Effects of FDI into Central East Europe
1 Introduction: The Scope of the Review 3
Björn Jindra
2 The Theoretical Framework: FDI and Technology Transfer 6
Björn Jindra
FDI, foreign subsidiary and MNC 6
MNEs 7
Technology transfer 8
Technology transfer via inward FDI 16
Classification of determinants for technology transfer 27
Principal research questions 29
3 Empirical Studies: Approaches, Methodological
Problems and Findings 30
Björn Jindra
Methodological challenges 30
Meta-analysis of traditional econometric studies 35
Mezzo-analysis in technology transfer research 65
4 Conclusions Drawn from the Latest Research: Lessons,
Limits and New Research Trends 72
Björn Jindra
Lessons from existing research 72
Limits of existing research and new research trends 72
The broader research agenda 74
v
vi Contents
Part II Empirical Studies
5 FDI, Productivity and Economic Restructuring in
Central and Eastern Europe 77
Judit Hamar and Johannes Stephan
International theory of trade and finance 77
National and industrial labour productivity levels 79
The importance of FDI in CEE economies 83
The changing focus of foreign investors, by broad sectors
of the economy 85
The penetration of CEECs’ manufacturing industry by FDI 86
The role of FIEs in CEECs’ productivity improvements 87
The role of FIEs in technology upgrading 89
6 An Econometric Study of Estonia and Slovenia: The
Effect of FDI on Labour Productivity 96
Priit Vahter
Introduction 96
Theoretical background 96
Previous empirical literature 102
Data and descriptive statistics 105
General model and econometric concerns 114
Estimation results 119
Conclusions 123
7 Results of a Fieldwork Project 126
Judit Hamar and Johannes Stephan
Introduction 126
Conceptual framework: the taxonomy for FIEs and
potential for technology transfer 127
The main features of the sample 132
The empirical taxonomy of FIEs and potential for internal
technology transfer 134
Intensity of integration with the host economy and
potential for external technology transfer 145
The potential for internal and external technology
transfer: summary of results 152
Determinants of FIE development 153
Appendix: The Questionnaire 160
Bibliography 165
Index 176
List of Tables
2.1 Explicit channels for internal and external effects via
foreign subsidiaries 17
2.2 A classification of determinants for technology transfer
via inward FDI 26
3.1 Overview of econometric studies, 1998–2004 36
3.2 Summary of the meta-analysis 49
3.3 Determinants tested in econometric studies in the
sample 63
3.4 Determinants of technology (meta- and mezzo-analysis) 68
5.1 National and industrial labour productivity levels,
selected CEECs, 2002 80
5.2 Structural adjustments: the share of manufacturing
sectors, by employment and by gross value added, 1993
and 2000 81
5.3 Inward FDI stock as a percentage of GDP, 1995–2002 83
5.4 FIEs’ share in the Hungarian economy, 1992–2001 84
5.5 Inward FDI flows as a percentage of gross fixed capital
formation (GFCF), 1991–2002 85
5.6 Stock of FDI in manufacturing and some major service
sectors, 1998, 2000–2 86
5.7 FIEs’ share in manufacturing industries, 2000 and 2001 87
5.8 Performance differences between FIEs and DEs, 2000 and
2001 88
5.9 Structure of FIEs according to technology levels of
manufacturing industries 90
5.10 Importance of FIEs, by technological level 91
6.1 Data description, 1994–2001 108
6.2 Descriptive statistics on the share of FDI in Estonia and
Slovenia, 2001 and 2000 108
6.3 Estonia: productivity difference between the four types
of firms, 1996–2001 109
6.4 Slovenia: productivity difference between the four types
of firms, 1994–2000 113
6.5 Average monthly wages in manufacturing, selected
CEECs, 2000–2 114
vii
viii List of Tables
6.6 Slovenia: regression results of the estimated model, the
effect of FDI on productivity, 1994–2000 118
6.7 Estonia: regression results of the estimated model, the
effect of FDI on productivity, 1996–2001 118
6.8 The first stage of the Heckman-type two-step procedure 120
6.9 The effect of FDI on productivity 121
7.1 Distribution of firms, according to technology and
country 132
7.2 Distribution of sample FIEs, by country and size 133
7.3 Autonomy indices and FIE productivity growth in the
complete sample 136
7.4 Distribution sales and purchases, by regions 146
7.5 Share of backward and forward linking FIEs and the
OPT type of FIEs 148
7.6 Indicators for non-material external technology transfer
potential 150
7.7 Results of a stepwise OLS regression in five model
specifications 156
List of Figures
2.1 General channels of technology transfer and transfer
via the foreign subsidiary 9
3.1 Results for technology transfer via foreign subsidiaries
in the transmission economies 62
5.1 FDI and national labour productivity, 1993, 2000
and 2002 78
5.2 FDI inflows into CEECs, by host region, 1991–6,
1994–2002 82
5.3 Hourly industrial labour costs in manufacturing industry,
European countries, 2000 94
6.1 FDI inflows into Estonia and Slovenia, 1998–2002 106
7.1 The conceptual taxonomy of FIEs and potential for
technology transfer 130
7.2 Empirical taxonomy of FIEs and potential for technology
transfer: sector-specific groups of subsidiaries 140
7.3 Empirical taxonomy of FIEs and potential for technology
transfer: country-specific groups of subsidiaries 143
ix
