Horizontal And Vertical FDI Spillovers: Recent Evidence From The Czech Republic

This paper analyzes the effects of Foreign Direct Investment on the sales growth rate of domestic companies in the Czech Republic. Using firm-level panel data from 1995 to 2003, it studies both horizontal and vertical spillovers. The paper allows for the lagged nature of spillovers and pays attention to the potential endogeneity of FDI with respect to future industry growth. The results suggest that domestic companies are mostly suffering in the presence of foreign companies, especially in upstream sectors. Negative horizontal and forward spillovers are present mainly in recent years. Time sensitivity is revealed for horizontal spillovers.