The share of FDI in the value added of innovative and other industries in Poland

Abstract

PurposeThis study aims to examine the share of foreign direct investment (FDI) in creating the value added (VA) of innovative and other industries in Poland in 2004–2020.Design/methodology/approachIn terms of the empirical analysis of FDI stocks, their locations were divided into innovative and other industries. The differences in the creation of VA are presented by domestic and foreign enterprises. The impact of FDI stocks in individual industries on gross domestic product (GDP) changes was assessed using the vector error correction model (VECM).FindingsFDI from innovative industries generated approx. 7% VA of the Polish economy in the years 2004–2020. In 2009–2018, the share of VA of foreign enterprises in innovative industries in Poland showed a faster growth (by 5 pp) than in other industries. The results of decomposition confirm that the level of explanation of GDP by FDI in innovative industries is higher than in other industries.Research limitations/implicationsChanges in the classification of activities reduce the time series period available.Practical implicationsThis study explains the participation of foreign and domestic enterprises in creating VA. The results are useful to pursuing the national investment policy.Social implicationsThe economic results of domestic and foreign enterprises in the host country affect the economic growth and development and ultimately the socio-economic conditions of life.Originality/valueThis work provides some additional explanations for the inconclusive results of international research into the impact of FDI on GDP or the spillovers effects. Its usefulness concerns the detailed impact of FDI by industrial structures on GDP.