FDI and supplier-oriented upgrading in the Czech motor vehicle industry

Abstract

The Czech Republic has succeeded in building a new comparative advantage in the motor vehicle and motor component production. Yet the Czech-owned companies only weakly contribute to the Czech upgrading. The Czech-owned companies are totally absent from the first tier suppliers and are only linked by casual technological relationships to foreign-owned multinational subsidiaries. This kind of relationship limits the vertical spillovers from foreign-owned multinational subsidiaries and is responsible for the existence of a weak link in the Czech automotive system that may foster the relocation of foreign-owned subsidiaries in foreign countries.