Inward FDI skilled labour, and product differentiation in the CEEC

Aleksander Rutkowski

The ratios of spending on R&D, advertising and marketing to sales are employed accordingly as direct determinants of the degree of vertical and horizontal product differentiation. The model is verified with direct regressions and a system of simultaneous regressions combining large firm survey with sector-level data from the UNCTAD for 13 Central and Eastern European countries. The econometric results evince that the increased demand for skilled labour (human capital) was greater than any FDI-induced labour market spillovers. As expected, this contributed to less differentiation which became more costly. Consistently, foreign-owned enterprises employed more highlyskilled employees but they reacted to more foreign investment similarly to domestic firms (so reducing the level of differentiation).

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Year of publication:	2006
Authors:	Rutkowski, Aleksander
Subject:	product differentiation \| business strategy \| inward FDI \| skilled labour \| Central and Eastern Europe \| Auslandsinvestition \| Foreign investment \| Osteuropa \| Eastern Europe \| Produktdifferenzierung \| Product differentiation \| Strategisches Management \| Strategic management \| Fachkräfte \| Skilled labour \| Schätzung \| Estimation \| Spillover-Effekt \| Spillover effect