| Abstract [eng] |
The prevailing opinion in the scientific literature is that attracting foreign direct investment (FDI) promotes the economic development of the host country. Foreign direct investment is carried out by multinational companies and therefore foreign direct investment is identified as the main channel for technology transfer in the global market. Multinational companies transfer their technology and know-how to the host country of the investment. In this way, foreign direct investment can cause a spillover effect, when companies in the host country imitate multinationals and increase their productivity and performance. However, recent studies show that foreign direct investment can also have a negative impact on companies in the host country. Multinational companies increase competition in the host country, and increased competition can lead to local companies losing market share or even crowding out local companies. Increased competition due to the entry of multinational companies into the domestic market may lead to a decrease in sales volumes of local companies and a decrease in profits. As foreign direct investment can have both positive and negative impact on the development of host country companies, it is important to assess the impact of foreign direct investment on indicators reflecting the development of Lithuanian manufacturing companies, such as turnover, labor costs, labor productivity, net profit. Subject of the research is the impact of FDI on the development of Lithuanian manufacturing firms. Objective of the research is to determine the impact of foreign direct investment on the development of Lithuanian manufacturing firms. The main results of the research. In part 1 of the research, the analysis of the situation of foreign direct investment in Lithuania was performed. Analysis results show that foreign direct investment has a significant impact on Lithuania's economic development. The Lithuanian manufacturing sector generates almost a fifth of Lithuania's GDP. Therefore, it is important to theoretically and empirically study the impact of foreign direct investment on Lithuanian manufacturing firms. The part 2 of the research aimed at the analysis of the scientific literature to determine the impact of foreign direct investment on the manufacturing enterprises of the host country. An analysis of the scientific literature has revealed that foreign direct investment has a direct and indirect impact. Foreign direct investment can have a positive direct impact on the manufacturing enterprises of the host country, as multinational enterprises transfer technology and know-how, thereby increase the productivity of the acquired manufacturing enterprises. Foreign direct investment can have an indirect impact on domestic companies in the host country. Indirect effects can be both positive - due to the spillover effect and negative - due to increased competition. The spillover effect occurs when local manufacturing companies take over technology, know-how, and managerial skills from multinational companies. The spillover effect increases the productivity of local manufacturing companies. However, foreign direct investment increases competition in the host country's manufacturing sector. Multinational companies are highly productive and therefore local manufacturing companies can lose market share or even can be crowded out of the market. Foreign direct investment can have both positive and negative impacts on the indicators of the development of manufacturing enterprises in the host country: labor productivity, turnover, net profitability, and labor costs. In part 3 of the research, the research methodology was developed. In part 4 of the research, correlation and regression analysis were performed to determine the impact of foreign direct investment on the development of Lithuanian manufacturing firms. The results of the study revealed that the share of employment in foreign-controlled companies has a positive impact on the productivity of Lithuanian manufacturing firms. The number of foreign-controlled enterprises increases the labor costs of Lithuanian manufacturing firms. The results of the study revealed that the share of employment in foreign-controlled enterprises has a positive impact on the turnover of Lithuanian manufacturing firms. FDI indicators have a positive impact on the growth of net profit of micro, small, and medium-sized Lithuanian manufacturing firms. The results of the analysis showed that the share of employees in foreign-controlled companies has a positive impact on the turnover of local Lithuanian manufacturing firms. The results of the empirical study confirmed the theoretical assumption that foreign direct investment causes a spillover effect in the Lithuanian manufacturing sector. |
