The significance of FDI for innovation activities within domestic firms - The case of Central East European transition economies

Foreign direct investment is expected to play a significant role as a multiplier of modern production- and management-know-how in Central East European transition economies. The so-called technology-spillovers are explained through externalities or extra-marketlinkages. In practice they can take place via demonstration effects, labor mobility, supplier contacts, customer contacts or networking activities. However, the empirical study on the example of Hungarian industry shows that foreign owned and domestic firms – mainly due to their strong technological disparities – build virtually separate spheres within the industrial sector. Thus, technology-spillovers do hardly appear as an innovation-stimulating means for domestic companies.

Technological capability of foreign and West German investors in East Germany

Foreign direct investment (FDI) plays an important role for countries or regions in the process of economic catching-up since it is assumed – among other things – that FDI brings in new production technology and knowledge. This paper gives an overview about the development of FDI in East Germany based on official data provided by the Federal Bank of Germany. The investigation also includes a comparison of FDI in East Germany to Central East European countries. But the main focus of the paper is an analysis of the technological capability comparing majority foreign and West German owned firms to majority East German owned firms. It shows that foreign and West German subsidiaries in East Germany are indeed characterized by superior technological capability with respect to all indicators looked at (product innovation, research & development, organizational changes etc.).

Innovation cooperation in East Germany - only a half-way success?

The paper focuses on the question whether enterprises that engage in innovation cooperation with external partners are more innovative and thus more productive than non-cooperating firms. A comparison between East and West Germany is being made. It shows that cooperating enterprises in East and West Germany are indeed more innovative than non-cooperating firms, but there remains a clear productivity gap between East and West German cooperating firms. Furthermore, in East Germany - different from West Germany - non-cooperating firms are even more productive than cooperating firms.

Subsidized Vocational Training: Stepping Stone or Trap? An Evaluation Study for East Germany

The aim of this paper is to analyze whether the formally equal qualifications acquired during a subsidized vocational education induce equal employment opportunities compared to regular vocational training. Using replacement matching on the basis of a statistical distance function, we are able to control for selection effects resulting from different personal and profession-related characteristics, and thus, to identify an unbiased effect of the public support. Besides the ‘total effect’ of support, it is of special interest if the effect is stronger for subsidized youths in external training compared to persons in workplace-related training. The analysis is based on unique and very detailed data, the Youth Panel of the Halle Centre for Social Research (zsh). The results show that young people who successfully completed a subsidized vocational education are disadvantaged regarding their employment opportunities even when controlling for personal and profession-related influences on the employment prospects. Besides a quantitative effect, the analysis shows that the graduates of subsidized training work in slightly worse (underqualified) and worse paid jobs than the adolescents in the reference group. The comparison of both types of subsidized vocational training, however, does not confirm the expected stronger effect for youths in external vocational education compared to workplace-related training.microeconometric evaluation, matching, vocational education, east germany

Technology spillovers from external investors in East Germany: no overall effects in favor of domestic firms

The study deals with the question whether external (foreign and West German) investors in East Germany induce technological spillover effects in favor of domestic firms. It ties in with a number of other econometric spillover studies, especially for transition economies, which show rather mixed and inconclusive results so far. Different from existing spillover analyses, this study allows for a much deeper regional breakdown up to Raumordnungsregionen and uses a branch classification that explicitly considers intermediate and investment good linkages. The regression results show no positive correlation between the presence of external investors and domestic firms’ productivity, no matter which regional breakdown is looked at (East Germany as a whole, federal states, or Raumordnungsregionen). Technology spillovers which may exist in particular cases are obviously not strong enough to increase the domestic firms’ overall productivity.East Germany, foreign direct investment, technology spillovers, innovation, productivity

Does Qualification Drive Innovation? A Microeconometric Analysis Using Linked-employer-employee Data

Degree-level science and engineering skills as well as management and leadership skills are often referred to as a source of innovative activities within companies. Broken down by sectoral innovation patterns, this article examines the role of formal education and actual occupation for product innovation performance in manufacturing firms within a probit model. It uses unique micro data for Germany (LIAB) that contain detailed information about innovative activities and the qualification of employees. We find significant differences of the human capital endowment between sectors differentiated according to the Pavitt classification. Sectors with a high share of highly skilled employees engage in product innovation above average (specialized suppliers and science based industries). According to our hitherto estimation results, within these sectors the share of highly skilled employees does not, however, substantially increase the probability to be an innovative firm.innovation, human capital, qualification, sectoral innovation system

Foreign Subsidiaries in the East German Innovation System – Evidence from Manufacturing Industries

This paper analyses the extent of technological capability of foreign subsidiaries located in East Germany, and looks at the determinants of foreign subsidiaries’ technological sourcing behaviour. The theory of international production underlines the importance of strategic and regional level variables. However, existing empirical approaches omit by and large regional level factors. We employ survey evidence from the “FDI micro data- base” of the IWH, that was only recently made available, to conduct our analyses. We find that foreign subsidiaries are above average technologically active in comparison to the whole East German manufacturing. This can be partially explained by the industrial structure of foreign direct investment. However, only a limited share of foreign subsidiaries with R&D and/or innovation activity source technological knowledge from the East German innovation system. If a subsidiary follows a competence augmenting strategy or does local trade, it is more likely to source technological knowledge locally. The endowment of a region with human capital and a scientific infrastructure has a positive effect too. The findings suggest that foreign subsidiaries in East Germany are only partially linked with the regional innovation system. Policy implications are discussed.east germany, regional innovation system, foreign direct investment

Rahmenbedingungen für einen erfolgreichen Technologietransfer und Perspektiven des Innovationsstandortes Sachsen

Forschung und Entwicklung werden als Treiber des technischen Fortschritts und Garanten der internationalen Wettbewerbsfähigkeit angesehen. Der Freistaat Sachsen nimmt hinsichtlich der Ausgaben für Forschung und Entwicklung im Vergleich zu den Neuen Ländern eine Spitzenposition ein und kann sich auch mit einer Reihe westdeutscher Länder messen, ausgenommen Baden-Württemberg, Bayern und Hessen. Die immer noch relativ niedrige Forschungsintensität der Wirtschaft im Vergleich zur öffentlichen Forschung ist strukturell bedingt. Auf aggregierter Ebene kompensieren die öffentlichen Forschungsausgaben dieses transformationsbedingte „Defizit“. Mit Blick auf diese Situation besitzt der Technologietransfer zwischen Wissenschaft und Wirtschaft, insbesondere von Universitäten zu Unternehmen, eine hohe Bedeutung. Den Überlegungen der systemischen Innovationstheorie folgend sind verschiedene Kanäle des Transfers von Wissen zwischen Wissenschaft und Wirtschaft möglich. Dazu zählen die Auftragsforschung der Universitäten, Patentaktivitäten, Publikationen sowie Verbundprojekte. Die empirischen Befunde zu diesen ausgewählten Mechanismen des Technologietransfers lassen erkennen, dass der Freistaat Sachsen im Vergleich zu anderen Ländern eine solide Position einnimmt, aber auch noch Entwicklungspotenziale bestehen. Eine technologieoffen gestaltete Forschungspolitik kann dabei unterstützend wirksam sein.

What Determines the Innovative Success of Subsidized Collaborative R&D Projects? – Project-Level Evidence from Germany –

Systemic innovation theory emphasizes that innovations are the result of an interdependent exchange process between different organizations. This is reflected in the current paradigm in European innovation policy, which aims at the support of collaborative R&D and innovation projects bringing together science and industry. Building on a large data set using project-level evidence on 406 subsidized R&D cooperation projects, the present paper provides detailed insights on the relationship between the innovative success of R&D cooperation projects and project characteristics. Patent applications and publications are used as measures for direct outcomes of R&D projects. We also differentiate between academic-industry projects and pure inter-firm projects. Main results of negative binomial regressions are that large-firm involvement is positively related to pa-tent applications, but not to publications. Conversely, university involvement has positive effects on project outcomes in terms of publications but not in terms of patent applications. In general, projects’ funding is an important predictor of innovative success of R&D cooperation projects. No significant results are found for spatial proximity among cooperation partners and for the engagement of an applied research institute. Results are discussed with respect to the design of R&D cooperation support schemes.R&D Cooperation, Innovation, Academic-Industry-Linkages, Innovation Policy