Economic effects of production fragmentation and technological transfer: the evidence from CEE countries

Abstract

Foreign direct investment (FDI) inflow is traditionally considered as an important factor of structural changes and productivity growth in Central and Eastern European countries (CEECs) due to transfer of technologies and active participation in global value chains (GVC). The aim of the study is to estimate the influence of technological transfer on structural changes in CEECs. An empirical analysis of the impact of FDI and other indicators of technological transfer on the export structure was performed. We consider three export groups of technology-intensive manufactures: high-, medium- and low skill and one export group of labor and resource-intensive manufactures.The analysis includes a panel framework covering seven CEECs (Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia) over the period of 2001–2016. OLS with pooled data, panel data with fixed effects and dynamic panel-data model were used as principal methods. Our results mostly reflect the prediction of the Flying Geese Model (FGM) and GVC theory in terms of: (i) stimulating effect of FDI on high-skill and technology-intensive manufactures; (ii) significance of impact of technology transfer through technological import growth for all export sectors; (iii) important contribution of EU integration to technological development of CEECs