Foreign direct investment in the czech economy

If compared internationally, Czech Republic belongs to a group of countries with highly intensive foreign direct investment (FDI) inflows. Its analytical studies were confronted, however, with a shortage of reliable time series of industrial data on FDI. The analyses of determining factors of foreign capital inflows came to conclusion that foreign investors were originally only rarely motivated to base their ventures on the endowments of local human capital. The initial motive to take advantage of the availability of cheap labour was in the later stages overshadowed by a strategy of investing into capital intensive industries. The role of human capital and increasing returns to scale came to significance in the second half of 1990s only. Until 1997 Czech domestic firms have not been able to take advantage of the spillover effects of FDI, especially in the imitation of technologies and the adoption of human capital from foreign firms.

Keywords: foreign direct investment, statistics, theory of allocation, determining factors