The Effect of Multinational Companies on the Fragmentation of Production and on Poland’s Intra-Industry Trade with Other OECD Countries
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Publication date: 2008-10-31
GNPJE 2008;227(10):1–21
The article examines the role of multinational companies originating from OECD countries in the fragmentation of production processes in Poland. The author also discusses the ways in which multinational companies influence Poland’s foreign trade. Cieślik sets out to check if multinational companies contribute to the fragmentation of international production processes and if their operations lead to a growing proportion of intra-industry trade in Poland’s overall trade with individual OECD countries. The author verifies this hypothesis empirically, using panel data for 29 OECD countries for the 1994-2006 period. Statistical data for Poland’s foreign trade disprove the hypothesis. Empirical data obtained with the use of fixed and random effects estimators show that country-specific factors – rather than the operations of multinational companies – are responsible for the development of intra-industry trade between Poland and other OECD countries, Cieślik says. It thus turns out that incentives other than a desire to reduce production costs tend to be the key factors driving multinational companies in their business in Poland. Cieślik also dispels worries frequently voiced in developed countries that a growing number of businesses may be tempted to move labor-intensive stages of production to emerging markets such as Poland.