Multinationals in the motor vehicles industrya general equilibrium analysis for a transition economy

Resumen

In the Post-Communist era many western multinational enterprises (MNEs) have arrived to the Czech Republic. The process has been particularly intense in the Motor vehicles sector. This article analyses the economy wide and sectoral impacts for this host economy by means of a computable general equilibrium (CGE) model. The growth of the capital stock for Motor vehicles MNEs leads to small increases in GDP and welfare. However, after a certain degree of capital accumulation saturation effects arise and GDP and welfare begin to fall. The phenomenon of profit repatriation, which has been substantial since 2004, can considerably exacerbate the negative effect on GDP and welfare.