Foreign Direct Investment, Technological Spillovers and the Agricultural Transition in Central Europe

The article reports on spillovers from foreign direct investment to related industries in Central European transition countries. In particular, the impact of foreign investment in the sugarbeet-processing industry on the wider agro-food sector is investigated. The empirical findings indicate that foreign direct investment brings not only much needed capital to the region but also managerial and technological skills which are in similarly short supply. Technical support in the form of training programmes, pilot demonstration projects and innovative contract designs is found to help foreign affiliates secure sufficient high quality raw material supplies, while inducing sector-wide improvements in agricultural productivity and agri-business practices.