The limits of foreign-led growth: Demand for digital skills by foreign and domestic firms in Slovakia

This paper addresses demand for skilled labour in Slovakia, a country that is characterized by a high degree of economic integration through inward foreign investment and through international backward linkages within global value chains. Developing existing approaches to political economy and global production networks (GPNs), our framework distinguishes between demand for digital skills on two levels: occupational structure; and skill content within occupational types. In this way, we can assess not only what kind of workers are hired by companies, but also what kind of specific skills are required from these workers. Using a large dataset on vacancies from a leading job portal, combined with administrative data on company size and ownership, we show that foreign and mixed-ownership companies generally advertise for higher skilled occupations than domestic firms, but their skill requirements for these jobs are lower than in similar jobs in domestic companies. Foreign companies have higher skill requirements only in some blue-collar jobs linked to assembly and component manufacturing. For white collar occupations, domestic companies are more likely to require digital skills. The findings confirm our expectations about the position of Slovakia as a country in an integrated periphery, where multinational companies are heavily present but rarely bring complex activities. Our key policy implication is that foreign direct investment in the integrated periphery brings only a limited potential for technology transfers.