Original scientific paper
Foreign Direct Investment and the Productivity of Croatian Companies in the Industrial Sector
Zdravko Marić
Abstract
This paper attempts to analyze the effects of foreign direct investment on the productivity of Croatian companies in the industrial sector. Given the sample of 3,336 companies in the period 1999-2005, regression analysis on panel data was used in order to investigate whether foreign capital has brought positive effects to the Croatian companies in the sense of increased productivity. The analysis was based on the production function, in which the effects of foreign direct investment were recognized as two segments of total factor productivity. The first segment is the so-called own-firm effect of foreign direct investment, which implies that companies in foreign ownership are on average more productive than domestic ones. The other segment is the so-called spillover effect of foreign direct investment, which means that foreign capital penetration brings positive effects to other domestic companies in different sectors of economy in the sense of transfer of technology and know-how. The results suggest that foreign direct investment in the industrial sector has brought positive own-firm as well as spillover effects.
Keywords
foreign direct investment; own-firm effects; spillover effects; panel data analysis; industry; Croatia
Hrčak ID:
29624
URI
Publication date:
3.11.2008.
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