Organization and spillovers in consolidating local industries

The aim of this article is to analyze the linkages between and spillovers from foreign-owned (foreign) to domestic-owned (domestic) firms in the Czech automotive industry.Theoretically and conceptually, our research draws on two strands of literature: spillovers, linkages and effects of foreign direct investment on domestic firms and regional economic development; and literature on global production networks, global value chains and industrial upgrading.Domestic firms vary in their capabilities and absorptive capacity which, along with the particular nature of the contemporary automotive value chain, significantly influence their ability and potential to benefit from linkages and spillovers.

First is vast literature on spillovers, linkages and effects of FDI on domestic firms and regional development (e.g.

Firn, 1975 ; Dicken, 1976 ; Britton, 1980 ; Hayter, 1982 ; Phelps, 1993 ; Amin et al., 1994 ; Aitken and Harrison, 1999 ; Blomström and Kokko, 2001 ; Hansen et al., 2009 ; Jindra et al., 2009 ).

Second is literature on global production networks (GPNs,) global value chains (GVCs) and industrial upgrading (e.g.

Kaplinsky, 2000 ; Henderson et al., 2002 ; Humphrey and Schmitz, 2002 ; Gereffi et al., 2005 ).

We argue that spillover effects from FDI at the firm level vary significantly across the Czech automotive industry and are strongly affected by differences in the capabilities and absorptive capacity of domestic firms and by the changing organization of the automotive industry.

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