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Transcript of Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International...
Wiener Institut für Internationale Wirtschaftsvergleiche
The Vienna Institute for International Economic Studies
www.wiiw.ac.at
Conference
„Innovation: Engine for Economic Growth“
Sofia, 30-31, October 2014
Attracting High-Tech FDI
Gábor Hunya, wiiw [email protected]
Ó wiiw
2
Role of FDI in economic growth and competitiveness Foreign direct investment (FDI) can transfer capital, knowledge, generate growth,
fixed capital formation, exports and employment; increase competition, operate in
islands or integrated
Investing companies have firm-specific advantages, superiour knowledge
Attractive countries have location-specific advantages (cost, agglomeration,
market, resources, etc.)
Inward FDI policy (sequencing): attract FDI, generate spillover, support upgrading
of production structures, motivate reinvestment of subsidiary profits, attract R&D
Generating spillovers to domestic economy to support growth, employment,
knowledge, interaction between foreign and domestic firms, spin-offs
Since the 2008 crisis: low investments, meagre FDI inflow in the EU
Ó
3
Source: Eurostat, wiiw calculations.
1Q'07
2Q'07
3Q'07
4Q'07
1Q'08
2Q'08
3Q'08
4Q'08
1Q'09
2Q'09
3Q'09
4Q'09
1Q'10
2Q'10
3Q'10
4Q'10
1Q'11
2Q'11
3Q'11
4Q'11
1Q'12
2Q'12
3Q'12
4Q'12
1Q'13
2Q'13
3Q'13
4Q'13
1Q'14
50
60
70
80
90
100
110
120BG CZ HU RO SI SK EU-15 NMS-11
Gross fixed capital formation, 4Q 2008 =100, seasonally adjusted and adjusted data by
working days
Investment activity: NMS levels remain below 2007
Ó wiiw
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FDI-Inflow declined more than investmentsInflow in % of gross fixed capital formation, 2004-2013
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
5
10
15
20
25
30
NMS-11 SOE-7
Source: wiiw Database on Foreign Direct Investment in Central, East and Southeast Europe, 2013.
Ó wiiw
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Less decline from low level after the crisisFDI inflow in % of gross fixed capital formation
2009 2010 2011 2012 2013
-10
-5
0
5
10
15
20
25
30
Bulgaria Croatia Czech R. HungaryPoland Romania Slovakia Slovenia
Ó wiiw
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Greenfield investments in the NMS, (fdimarkets.com)Number of projects, Capital investment in EUR 10 million, Job creation in 100 jobs
2008 2009 2010 2011 2012 20130
1000
2000
3000
4000
5000
6000
7000
8000
9000
ProjectsCapitalJobs
Ó wiiw
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Number of Greenfield Projects, 2011-2013
Bulgaria Croatia Czech R. Hungary Poland Romania Slovakia Slovenia0
50
100
150
200
250
300
2011 2012 2013
Quelle: http://www.fdimarkets.com.
Ó wiiw
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Distribution of FDI projects by main activities 2009-2013, %
Ó wiiw
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Bulgaria and Sofia in international competition
for high-tech FDI
Bulgaria got only 27 projects in five years in the activities: Design, Development &
Testing; ICT & Internet Infrastructure; Shared Services Centre; Customer Contact
Centre; Headquarters; Technical Support Centre; Research & Development
Bulgaria has only one Fast Growth Technology Firm (Deloitte, Fast 50 Central
Europe 2014)
Sofia in Europe – lowest operating cost, worst environment for advanced services
location (IBM-Plant Location International); among them best for shared service
centres; de-coupled from manufacturing
Sofia: better position in terms of regulation and market access than in terms of
infrastructure and living conditions – cost/quality trade-off
Ó wiiw
11
De-industrialization or re-industrialization?Industrial production, Sept 2008 =100
2007
2q 2007
3q 2007
4q 2007
2008
2q 2008
3q 2008
4q 2008
2009
2q 2009
3q 2009
4q 2009
2010
2q 2010
3q 2010
4q 2010
2011
2q 2011
3q 2011
4q 2011
2012
2q 2012
3q 2012
4q 2012
2013
2q 2013
3q 2013
4q 2013
2014
70
80
90
100
110
120
130
CZ HU PL SI SK BG RO
Seasonally adjusted data.Source: Eurostat.
INVESTMENT IS A RELATIONSHIP NOT A SINGLE TRANSACTION
Investment policy is an ongoing process:• Removing legal, regulatory, and administrative impediments to attracting and retaining FDI.• Maximizing its integration and spillovers in the domestic economy.• Using regional integration to foster FDI.
Vision and Strategy
Investment Attraction
Investment EstablishmentRetaining Investment
Linkages & Spillovers
Ó wiiw
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Spillovers occure when technology gap is small
The more subsidiaries are integrated into foreign parent companies – equity-,
strategic management-, technology-, export-import flows-wise - the higher
productivity growth they experience
Only few intra-industry spillovers from FDI, restricted to certain countries and
categories of firms
Knowledge spillovers occur more frequently if the technology gap between
domestic and foreign firms is not too large – increase human capital capacity
Generate spillovers by reducing the technology gap by upgrading absorption capacity of local firms and by stimulating linkages with local firms supporting the development of technology SMEs, high-growth firms
Ó wiiw
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Generate technology and R&D improving FDI
FDI incentive should help achieve qualitative goals (export propensity, transfer of
technology, R&D activity, local suppliers etc.)
Stimulate technological activities in foreign subsidiaries & technological
cooperation between domestic firms and foreign subsidiaries
Tools: technology and science parks, support/subsidy for interaction, support for
inhouse training, impact assessment / best practice
Need for: realistic strategy, efficient and collaborative public governance,
coordinated use of funds, interaction between government and business
BUT: high-tech and R&D subsidiaries do not perform domestic innovation –
suppliers, spinn-offs may!