INTRA-SECTORAL SPILLOVER EFFECTS OF FOREIGN DIRECT INVESTMENTS

The term “spillover effects” (productivity spillovers) is used in economic literature concerning foreign direct investment (FDI) to define the additional benefits from FDI that raise the general productivity level in the host country. Main, or direct, beneficiaries of these benefits are local enterprises, and foreign entities are not directly compensated for them. The sources of these benefits are mechanisms connected with competition and diffusion of foreign knowledge, occurring within branches (intra-sectoral spillovers) or between them (inter-sectoral spillovers). Despite numerous empirical studies into productivity spillovers, a univocal evaluation of the indirect influence of FDI on the effectiveness of factors of production in the host country remains an open question. Only research results imply that spillover benefits are not an automatic consequence of the presence of foreign subsidiaries on a given market and their magnitude and scope depend on the conditions offered by the host country. Many authors also emphasise that apart from benefits, there may also appear negative effects of FDI, due to the market stealing effect which can reduce spillover benefits, thus affecting the net effect. The purpose of this paper is presentation of the theoretical hypotheses and the results of the most interesting empirical studies and analysis of intra-sectoral spillovers in the context of characteristics of the host country