FDI and Performance: An Investigation of EU Manufacturing Industries

Abstract

This paper investigates the impact of foreign direct investment (FDI) on the performance of companies in low- and high-technologically intensive industries in the manufacturing sector in EU member countries, using datasets covering the period between 2010 and 2020. The industries were selected according to the EU High-tech classification of manufacturing industries based on NACE Rev.2 at 2-digit codes. The performance of companies in our study was measured based on turnover. We used a set of independent variables, such as inward and outward FDI stocks, imports and exports of goods and services, gross domestic product (GDP) at market prices, real effective exchange rate, gross domestic expenditure on research and development, and gross fixed capital formation. On applying the panel data methodology, our findings indicated that inward FDI stocks, imports of goods and services, and real effective exchange rates have a significant impact on the performance of companies in high-technologically intensive industries. For low-tech companies, exports of goods and services are important driving factors behind their performance.
 Keywords: high-tech industries, low-tech industries, foreign direct investment, performance, European Union