Abstract—Foreign Direct Investments (FDI) has been considered by many scholars as the most important channel for the transfer of knowledge and technology to firms of the host country. However, whether this knowledge and technology are hypothesized to spill over depends on the absorptive capacity of the host country which stems from well-equipped human resources such as scientists and cumulative expenditure in Research and Development (R&D). In this paper, we examine for the single time the extent of knowledge spillovers and the absorptive capacity of the Czech Republic regions using patent micro-data of the Czech statistical office. The paper finds that there is a significant knowledge inflow from the FDI to local firms. Furthermore, we detect that the hypothesis of the crowding out effect of FDI on domestic absorptive capacity is not rejected to the Czech Republic.

Index Terms—foreign direct investment, knowledge spillovers, absorptive capacity, patent application, utility model, Czech republic

Cite: Abdelwalid Rouag and Jan Stejskal, "Does FDI Generate Knowledge Spillovers in the Czech Republic? Evidence from Patent Applications and Utility Models," Journal of Advanced Management Science, Vol. 4, No. 1, pp. 16-21, January 2016. doi: 10.12720/joams.4.1.16-21