Foreign Direct Investment, Trade, and Skilled Labour Demand in Eastern Europe

In this paper, we study the effects of inward foreign direct investment (FDI) and trade on relative skilled labour demand in Poland, Hungary, and the Czech Republic. Our estimates show significant heterogeneity in the FDI effect across the three economies: the effect is always significantly positive for Hungary, weakly negative for Poland, and negligible for the Czech Republic. As to trade, we find much more homogeneity in coefficient estimates, which are generally negative for all countries, although significant only in the case of Hungary.