Abstract
Innovation plays a crucial role in regional development. There are a lot of ways how regional innovation could occur. One of them, important specially for less developed countries, is through foreign direct investment (FDI). Still, how these external flows of knowledge and innovation can influence regional growth and which policies are relevant to support them are not yet fully understood. This is especially important for CEE regions, which still show limited local knowledge and innovation endowment compare to European research area. We approached these issues by concentrating on the successful development of the automotive sector in Western Slovakia. Vast majority of companies in the sector are foreign owned, so the regional capabilities to utilize FDI as a most important source of knowledge and innovation are investigated. We chose the case study methodology based mainly on interviews with different actors in the industry. We showed the reasons and preconditions for the successful sector’s development from adaptive to an endogenous innovation pattern. As result, evidence suggests that national policies’ effectiveness very much depended on being tailored to regional and sector conditions for innovation creation or acquisition.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsReferences
Asheim B, Isaksen A (2002) Regional innovation systems: the integration of local ‘sticky’ and global ‘ubiquitous’ knowledge. J Technol Transfer 27(1):77–86
Babeľová Z, Lenhardtová Z, Cagáňová D, Weidlichová-Luptáková S (2010) Importance of projects in automotive industry. Res Pap Fac Mater Sci Technol Slovak Univ Technol 18(28):89–94
Barrios S, Görg H, Strobl E (2011) Spillovers through backward linkages from multinationals: measurement matters! Eur Econ Rev 55(6):862–875
Birkinshaw J, Hood N, Jonsson S (1998) Building firm-specific advantages in multinational corporations: the role of subsidiary initiative. Strateg Manag J 19:221–241
Blomström M, Kokko A (1998) Multinational corporations and spillovers. J Econ Surv 12(3):247–277
Blomström M, Kokko A (2001) Foreign direct investment and spillovers of technology. Int J Technol Manag 22(5/6):435–454
Blomström M, Kokko A (2003) The economics of foreign direct investment incentives. NBER Working Paper 9489, National Bureau of Economic Research
Bosco MG (2001) Does FDI contribute to technological spillovers and growth? A panel data analysis of Hungarian firms. Transl Corp 10(1):43–68
Bučar M, Rojec M, Starea S (2009) Backward FDI linkages as a channel for transferring technology and building innovation capability: the case of Slovenia. Eur J Dev Res 21:137–153
Buček M, Rehák Š, Hudec O (2011) The regional dimension of the knowledge economy. Ekonom, Bratislava (in Slovak)
Capello R et al (2012) KIT. Knowledge, innovation and territory. Final report
Carlsson B (2006) Internationalization of innovation systems: a survey of the literature. Res Policy 35(1):56–67
Cheung KY, Ping L (2004) Spillover effects of FDI on innovation in China: evidence from the provincial data. China Econ Rev 15(1):25–44
Criscuolo C, Haskel JE, Slaughter MJ (2010) Global engagement and the innovation activities of firms. Int J Ind Organ 28(2):191–202
Damijan JP, Knell M, Majcen B, Rojec M (2003) The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries. Econ Syst 27(2):189–204
Demirbag M, Glaister KW (2010) Factors determining offshore location choice for R&D projects: a comparative study of developed and emerging regions. J Manag Stud 47(8):1534–1560
Domanski B, Gwosdz K (2009) Toward a more embedded production system? Automotive supply networks and localized capabilities in Poland. Growth Chang 40:452–482
Driffield N, Jones C (2013) Impact of FDI, ODA and migrant remittances on economic growth in developing countries: a systems approach. Eur J Dev Res 25(2):173–196
Dunning JH (1994) Multinational enterprises and the globalization of innovatory capacity. Res Policy 23:67–68
Dyker DA (2001) Technology exchange and the foreign business sector in Russia. Res Policy 30:851–868
European Communities (2009) Monitoring industrial research: EU Industrial R&D Investment Scoreboard 2009. Office for Official Publications of the European Communities, Luxembourg
European Communities (2015) Monitoring industrial research: EU Industrial R&D Investment Scoreboard 2015. Office for Official Publications of the European Communities, Luxembourg
EY (2010) The Central and Eastern European automotive market: industry overview. Ernst & Young, Detroit
Feinberg SE, Gupta AK (2004) Knowledge spillovers and the assignment of R&D responsibilities to foreign subsidiaries. Strateg Manag J 25(8–9):823–845
Ferenčíková S, Fifeková M (2006) FDI spillovers in Slovakia: trends from the last decade and recent evidence from automotive industry. J Econ 54(7):633–651
Foray D, David PA, Hall B (2009) Smart specialisation—the concept. Knowl Econ Policy Brief 9(85):100
Gentile-Lüedecke S, Giroud A (2012) Knowledge transfer from TNCs and upgrading of domestic firms: the Polish automotive sector. World Dev 40(4):796–807
Gorodnichenko Y, Svejnar J, Terrell K (2014) When does FDI have positive spillovers? Evidence from 17 transition market economies. J Comp Econ 42(4):954–969
Giroud A, Jindra B, Marek P (2012) Heterogeneous FDI in transition economies—a novel approach to assess the developmental impact of backward linkages. World Dev 40(11):2206–2220
Guimon J (2009) Government strategies to attract R&D-intensive FDI. J Technol Transfer 34:364–379
Hardy J, Micek G, Capik P (2011) Upgrading local economies in Central and Eastern Europe? The role of business service foreign direct investment in the knowledge economy. Eur Plan Stud 19(9):1581–1591
Havranek T, Iršová Z (2011) Estimating vertical spillovers from FDI: why results vary and what the true effect is. J Int Econ 85(2):234–244
Iršová Z, Havránek T (2013) Determinants of horizontal spillovers from FDI: evidence from a large meta-analysis. World Dev 42:1–15
Jakubiak M, Kolesar P, Izvorski I, Kurekova L (2008) The automotive industry in the Slovak Republic: recent developments and impact on growth. International Bank for Reconstruction and Development/The World Bank
Javorcik BS (2004) Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. Am Econ Rev 94:605–627
Javorcik BS (2008) Can survey evidence shed light on spillovers from foreign direct investment? World Bank Res Obs 23(2):139–159
Jindra B, Giroud A, Scott-Kennel J (2009) Subsidiary roles, vertical linkages and economic development: lessons from transition economies. J World Bus 44(2):167–179
Kennel JC (2007) Foreign direct investment and local linkages: an empirical investigation. Manag Int Rev 47
Kokko A (1994) Technology, market characteristics, and spillovers. J Dev Econ 43(2):279–293
Kolasa M (2008) How does FDI inflow affect productivity of domestic firms? The role of horizontal and vertical spillovers, absorptive capacity and competition. J Int Trade Econ Dev 17(1):155–173
Krugman P (1991) Geography and trade. MIT Press, Cambridge MA, London
Kugler M (2006) Spillovers from foreign direct investment: within or between industries? J Dev Econ 80(2006):444–477
Lábaj M (2014) Štrukturálne aspekty ekonomického rozvoja. Slovenská ekonomika v globálnych súvislostiach [Structural aspects of economic development. Slovak economy in the global context]. SAV, Bratislava, p 168
Lorentzen J, Mollgaard P, Rojec M (2003) Host-country absorption of technology: evidence from automotive supply network in Eastern Europe. Ind Innov 10(4):415–432
Luptáčik M, Habrman M, Lábaj M, Rehák Š (2013) Národohospodársky význam automobilového priemyslu na Slovensku. Záverečná správa. Bratislava (in Slovak)
Masso J, Roolaht T, Varblane U (2010) Foreign direct investment and innovation in Central and Eastern Europe: evidence from Estonia. The University of Tartu Faculty of Economics and Business Administration Working Paper No. 67-2010
Meyer KE (2004) Perspectives on multinational enterprises in emerging economies. J Int Bus Stud 34(4):259–277
Meyer KE, Sinani E (2009) When and where does foreign direct investment generate positive spillovers: a meta-analysis. J Int Bus Stud 40(7):1075–1094
Mudambi R, Navarra P (2004) Is knowledge power? Knowledge flows, subsidiary power and rent-seeking within MNCs. J Int Bus Stud 35(5):385–406
Mytelka LK, Barclay LA (2004) Using foreign investment strategically for innovation. Eur J Dev Res 16(3):531–560
Narula R (2015) The viability of sustained growth by India’s MNEs: India’s dual economy and constraints from location assets. Manag Int Rev 55(2):191–205
Narula R, Driffield N (2012) Does FDI cause development? The ambiguity of the evidence and why it matters. Eur J Dev Res 24(1):1–7
Narula R, Dunning JH (2010) Multinational enterprises, development and globalization: some clarifications and a research agenda. Oxf Dev Stud 38(3):263–287
NESTA (2007) Hidden innovation: how innovation happens in six ‘low innovation’ sectors. NESTA, London
NESTA (2010) Measuring user innovation in the UK: the importance of product creation by users. NESTA, London
Nicolini M, Resmini L (2010) FDI spillovers in new EU member states. Econ Transit 18(3):487–511
Nölke A, Vliegenthart A (2009) Enlarging the varieties of capitalism: the emergence of dependent market economies in East Central Europe. World Polit 61(4):670–702
Noorbakhsh F, Paloni A, Youssef A (2001) Human capital and FDI inflows to developing countries: new empirical evidence. World Dev 29(9):1593–1610
Pavlínek P (2004) Regional development implications of foreign direct investment in Central Europe. Eur Urban Reg Stud 11(1):47–70
Pavlínek P (2015) Foreign direct investment and the development of the automotive industry in Central and Eastern Europe. In: Foreign investment in Eastern and Southern Europe after 2008. ETUI, Brussel
Pavlínek P (2016) Whose success? The state–foreign capital nexus and the development of the automotive industry in Slovakia. Eur Urban Reg Stud 23(4):571–593
Pavlínek P, Ženka J (2010) Upgrading in the automotive industry: firm-level evidence from Central Europe. J Econ Geogr 11(3):559–586
Pavlínek P, Žížalová P (2014) Linkages and spillovers in global production networks: firm-level analysis of the Czech automotive industry. J Econ Geogr 16(2):331–363
Pavlínek P, Domanski B, Guzik R (2009) Manufacturing industrial upgrading through foreign direct investment in Central European automotive. Eur Urban Reg Stud 16(43)
Phelps NA, Mackinnon D, Stone I, Braidford P (2003) Embedding the multinationals? Institutions and the development of overseas manufacturing affiliates in Wales and North East England. Reg Stud 37(1):27–40
Pickles J, Smith A, Buček M, Roukova P, Begg R (2006) Upgrading, changing competitive pressures, and diverse practices in the East and Central European apparel industry. Environ Plan A 38(12):2305–2324
Radosevic S (1999) Transformation of science and technology systems into systems of innovation in Central and Eastern Europe: the emerging patterns and determinants. Struct Change Econ Dyn 10(3):277–320
Rama R (2008) Foreign investment innovation: a review of selected policies. J Technol Transfer 33:353–363
Rondé P, Hussler C (2005) Innovation in regions: what does really matter? Res Policy 34:1150–1172
Simmie J, Martin R (2010) The economic resilience of regions: towards an evolutionary approach. Camb J Reg Econ Soc 3(1):27–43
Šipikal M (2013) Tailoring innovation policies to sectors and regions—the case of Slovakia. Danube 4(4):277–291
Šipikal M, Buček M (2013) The role of FDIs in regional innovation: evidence from the automotive industry in Western Slovakia. Reg Sci Policy Pract 5(4):475–490
Šipikal M, Pisár P, Uramová M (2010) Support of innovation at regional level. E+M Ekon Manag 13(4):74–84
Srholec M (2009) Does foreign ownership facilitate cooperation on innovation? Firm-level evidence from the enlarged European Union. Eur J Dev Res 21(1):47–62
Švač V (2010) R&D in Slovakia, Slovak Investment and Trade Development Agency. SARIO, Bratislava
Szanyi M, Iwasaki I, Csizmadia P, Illésy M, Makó C (2010) Cluster development in Hungary: searching for a ‘critical mass’ of business via cluster mapping. In: Local economies and global competitiveness. Palgrave Macmillan, London, pp 113–133
Tiwari AK, Mutascu M (2011) Economic growth and FDI in Asia: a panel-data approach. Econ Anal Policy 41(2):173–187
UNCTAD (2005) World investment report 2005. Transnational corporations and the internationalization of R&D. United Nations Commission for Trade and Development, Geneva
Zamborsky P (2012) Emergence of transnational clusters: evidence from the Slovak automotive industry. J East Eur Manag Stud 17(4):464–479
Zhang Y, Li H, Li Y, Zhou LA (2010) FDI spillovers in an emerging market: the role of foreign firms’ country origin diversity and domestic firms’ absorptive capacity. Strateg Manag J 31(9):969–989
Acknowledgments
Main part of this research was previously published by Šipikal and Buček in Regional Policy and Practice (2013). Research was conducted with support of ESPON (project “Knowledge Innovation Territory”) and VEGA (project n. 1/0098/15).
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG
About this chapter
Cite this chapter
Šipikal, M., Buček, M. (2018). The Role of FDI in Regional Innovation and Its Influence on the Emergence of Knowledge Spillover Effects. In: Stejskal, J., Hajek, P., Hudec, O. (eds) Knowledge Spillovers in Regional Innovation Systems. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-67029-4_7
Download citation
DOI: https://doi.org/10.1007/978-3-319-67029-4_7
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-67028-7
Online ISBN: 978-3-319-67029-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)