In this paper, we describe sourcing patterns of FDI activity and test empirically whether their impact on the host economy is such as predicted by theoretical models. In the analy-sis, we focus on inter-industry interactions between a multinational enterprise (MNE) which enters the domestic market and other firms in the economy within the broader con-text of international trade flows. Our main purpose is to determine whether FDI inflow indeed boosts demand for intermediate goods, and whether the MNE uses domestic sup-pliers of intermediate goods or whether it purchases its supplies from abroad or from other MNEs entering the downstream sector. Our analysis covers the time period 2001--2007 and concerns both Western and Eastern European countries. Using an unbalanced panel of industries in these countries and the given time period, we come to the con-clusion that even though FDI represents a positive shock to demand for intermediate goods, in countries of Eastern Europe this shock is better exploited by MNEs in the up-stream sector and foreign importing firms than by domestic producers.
CITATION STYLE
Nikolovová, P. (2013). Sourcing patterns of FDI activity and their impact on the domestic economy. Finance a Uver - Czech Journal of Economics and Finance, 63(3), 288–302.
Mendeley helps you to discover research relevant for your work.