Abstract
<p class="Default">This Paper has attempted to address the spillover effect of FDI on productivity in the Egyptian and Polish manufacturing sector. Empirical analysis has been implemented to determine the factors that influence productivity. In explaining the spillover effect of FDI, the study will apply a two stage least squares technique using the data panel between 2006 and 2014 across 9 sub sectors of the Egyptian and Polish manufacturing sector. A Cobb Douglas production function was used where productivity is established as a function of capital, labor, foreign direct investment, exports, imports, and technology gap.</p><p>The results from the production function suggest that physical capital and labor force are the main factors in determining the manufacturing productivity that accordingly enhance the fact that both physical capital and labor inputs are important to the productivity of manufacturing sector. It is also found that the foreign presence enhance productivity in the Egyptian and Polish manufacturing sector. We view the positive effect of FDI on productivity as evidence which indicates that the FDI inflow is not merely a source of capital; it is also a conduit for technology transfer. On the other hand, both imports, and technology gap exert a negative and significant effect on productivity. This is due to high protection, high tariffs in Egypt , and the technology of foreign firms is too advanced for domestic firms to adjust and absorb. In addition exports have a negative but insignificant effect as exports are mainly low-skill products. </p>
Highlights
The spillover effect is a potential impact of FDI on host countries
The spillover effect of FDI means that the inflow of foreign capitals would promote contribute in promoting the performance of domestic companies in the host country, and the monopolistic advantage which is owned by multinational enterprises (MNEs) would spillover into the host country
This paper is concerning of analysing FDI in Egypt and Poland, as they have benefited from foreign direct investment flows, where there was a positive influence on economic growth, considering that those associated with modern technology investments
Summary
The spillover effect is a potential impact of FDI on host countries. UNCTAD (2000) discussed the necessary factors for spillover of FDI to be realized that represented in technological capacity and policy settings of host countries. The spillover effect of FDI means that the inflow of foreign capitals would promote contribute in promoting the performance of domestic companies in the host country, and the monopolistic advantage which is owned by MNEs would spillover into the host country. Poland has adopted the early market reforms with robust institutional building, and was rewarded with an accession to the OECD in 1997. Poland has managed to succeed the privatization process in a broadly efficient and transparent way. Poland benefited from a large and rapidly growing domestic market, which helped to insulate it from external shocks, such as those in 2008-09
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
