Abstract
This paper examines the dynamics of the location patterns of the foreign direct investment(FDI)subsidiaries in manufacturing and service sectors across regions in a developing economy before and after the accession of the European Union in 2004. The data at the NUTS level 2 on regions in Poland is analyzed employing the revealed location advantage (RLA) index for industrial specialization (RLAis) of the regions. The study tests the concentration patterns of industrial sectors along with the industrial specialization level of regions’ participating foreign enterprises across all regions of Poland. The findings allow answering for the presented hypothesis testing the level of industrial specialization across regions and its impact on narrowing industrial specialization, wages and the level of R&D investment. The results determine that the location of foreign firms in service-related industries is concentrating mostly in the largest agglomerations with the presence of large markets and universities. While, also, several regions seem to be able to narrow their manufacturing specializations, they generally locate at, or near, the legacy centers of those industrial sectors. This provides answers for, and confirms the raised hypothesis and generally follows the existing theoretical path of the developed economies. The study, also, shows that Polish regions attracting a higher number of foreign service-related investments also seem to increase their industrial specialization in select manufacturing sectors that can increasingly attract R&D investment.
Highlights
Since the1990s global flows of foreign direct investment (FDI) to developing nations have grown significantly
The contribution of the analysis presented here helps to answer if the regions attracting more service-related FDI maintain or increase their presence of foreign firms in manufacturing sectors and whether regions with a high industrial specialization index level of FDI see an increase in R&D investment in them
The results of the analysis show industrial sectors specialization development patterns of foreign subsidiaries based on their industrial classification of activity across all regions of Poland for the period
Summary
Since the1990s global flows of foreign direct investment (FDI) to developing nations have grown significantly. In the case of the European Union (the EU), the countries which entered the block in 2004 became beneficiaries of this trend. A subsequent increase in the service sector to a dominant economic element for many countries has taken place (Miles,2005). Manufacturing sectors continue to enjoy exploring regional and local efficiencies and resources across the globe making it a dynamic part of the global economic transformation for developing nations. According to the UNCTAD 2015 report around two-thirds of global FDI stock is in the service-related industries with only one third in manufacturing sectors, this is an important trend that is closely watched and researched
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