FDI and Innovation in Central European Countries
FDI and Innovation in Central European Countries

Summary/Abstract: The article analyses the impact of inward foreign direct investments on innovation in the Visegrad countries. Given the differences between theory- and empiricsbased studies, this paper takes a two-angle approach, i.e. establishment of heterogeneity of results within the literature and examination with own empirics. Empirics results show that inward FDI does impact the number of patent applications (our proxy for innovation), but this impact is negative, which may suggest that, for the analysed countries, inward FDI is a source of brain drain, i.e. foreign investors acquire host assets making them unavailable for local companies, and that FDI in these countries is more focused on imitation/adaptation of new ideas invented abroad than on innovations that can be patented. Interestingly, we also find no causal relationship toward patent applications from expenditures on research and development (R&D), which we assign to inefficiencies of the public spending on innovation.

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