Measuring the size of the technology gap at a level of Czech regions

Abstract

The technology gap is one of key determinants of spillovers. This paper aims to quantify the size of the technology gap between foreign direct investments, which received investment incentives and business environment in six regions of the Czech Republic in time series of 2002-2014. The development of regional technology gap was determined by using the Shift-share analysis method - decomposition of the region's technological level into productivity, employment, and a combination of both of the effects. The main data source was the statistics issued decisions of investment incentives published by the agency CzechInvest; annual reports of foreign companies; data of the Czech Statistical Office and the OECD. The established indicator tracks the difference between the technological advancement of foreign firms and a regional business environment. The higher the value of this indicator than in other regions is, the higher the potential for technological growth the region has than regions compared. The magnitude of the value is given by the technological level of foreign companies and their share in regional employment. The best position takes the Pilsen region, which has the highest potential for spillovers in terms of the technology gap. On the contrary, the worst position has the Carlsbad region.