Productivity spillovers from foreign direct investment in Poland

Abstract

Using firm level data from the Polish manufacturing sector, we examine the effect of foreign direct investment on the scope of productivity growth of locally-owned firms. The results suggest that a higher foreign presence within an industry affects local firms negatively. However, the effects differ between groups of firms and gorups of industries. FDI has a negative impact on the performance of the most productive local firms in high competition industries. By contrast, the effect on the least productive state firms in low competition industries is positive. For the domestic industry as a whole (local and foreign firms together), a higher foreign presence has a positive impact on performance as foreign firms are on average more productive than local ones.

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