Increasing the value of automotive industries
In recent years, these two countries have become hubs in the automotive sector, building cars and their parts for major international manufacturers. In the case of the Czech Republic, over 1 200 companies are involved in the automotive value chain, and this excludes firms employing less than 20 workers, firms not engaged in production and firms not directly involved in the automotive industry chain. Slovakia, meanwhile, has 135 firms employing more than 20 workers that are directly part of the automotive industry chain. The Automotive industry project examined the motor vehicle industry in both countries with an eye to investigating the impact of foreign direct investment, and ways to increase value in the production chain. In particular, the project considered evaluating potential industrial upgrades and exploring spillovers from foreign to domestic companies. The results of this research will be used to help the team develop policy recommendations aimed at maximising regional development effects of foreign direct investment in the automotive industry in both countries. The Automotive industry project is using an interdisciplinary approach drawing on research traditions from three different disciplines: research in regional development and production networks in economic geography; research in foreign direct investment, the automotive industry and spillover effects in economics; and lastly, research on global value chains and economic entrenchment in industrial sociology. The project team is also differentiating itself from traditional research; instead of analysing the changing value and structure of exports, they analysed financial data and R&D indicators at the firm level. They were able to document that during 1998 and 2006, industrial upgrading was highly selective and very uneven. The statistical data showed that both product and process upgrading played a very important role in the Czech automotive industry. Automotive industry aims to develop policies that will maximise the potential positive effects of foreign direct investment on domestic firms, especially small and medium-sized enterprises, and on regional and national economic development.
