1. Introduction
Slovakia has outgrown the image of “no-name” countries. It is no longer known as a chunk of former Czechoslovakia but the biggest world car producer per capita by 2008.
It’s growth rate in the third quarter of 2007 is a record 9,4% without overheating the economy (domestic and foreign demand growth are balanced). Net export growth rate is 5,5% dominated by the car industry with more than 30% share.
Is this growth rate sustainable on the long run? What is the role of the car industry in this “economic miracle” besides accounting for more than 25% of the country’s industrial output? Would Slovakia make a good example of FDI efficiency that contributes to the country’s further development?
These are the questions I am willing to find answers for in this research paper. I begin with an overview of economic conditions and other prerequisites that determined FDI coming to the car industry in Slovakia. I will introduce the three major players. Based on the theoretical background I would then demonstrate with graphs and data collected from domestic and foreign sources how these spillovers are presented in reality. I will finish with the conclusions and risk evaluation.
My attempt is to prove the existence of spillover effects based on an industry–level study and define which of the above mentioned spillover types to what measures took place in the Slovak automotive industry. Particularly, I will focus on the gains from FDI through vertical linkages, as they are more common than spillover effects within the same sector.
1. Sluggish start, big finish?
2.1.The eighties
After gaining independence from the USSR Slovakia had to face the transformation process ...