This book explores whether foreign direct investment (FDI) can contribute to the competitiveness of industries in Central Europe and to narrowing the gap between these transition economies and countries within the European Union.
The Czech Republic, Hungary, Slovakia and Slovenia have attracted substantial FDI since the beginning of their transition to a market economy. Using exhaustive empirical data, the authors demonstrate that foreign investment enterprises in Central Europe have higher allocative efficiency, promote macro- and microeconomic restructuring and foster the restructuring of the manufacturing sector in accordance with the host countries' comparative advantages. The case of Austria is used to demonstrate the possible benefits of FDI. On the other hand, high foreign penetration leads to the concentration of production and exports and makes the economy more vulnerable to external shocks. In addition, there may be unwelcome pressures on economic policy in order to maintain the country's position as a frequented investment target. However, the analysis in this book suggests that, on the whole, economies in transition can become more competitive more rapidly and more profoundly with the help of foreign direct investment.
This book will be of interest to students and scholars of international economics, European studies, economies of transition and international business.
Edited by Gabor Hunya, Senior Research Economist, The Vienna Institute for International Economic Studies (WIIW), Austria
Contents: Foreword Introduction 1. Introduction: Integration Through FDI Making Central European Industries Competitive 2. Central Europe Catching-up Through FDI? 3. FDI, Technology Transfer and Growth in Economic Theory 4. The Role of FDI in Restructuring and Modernization: An Overview of Literature 5. Austria - Catching-up Through Inward FDI? 6. Foreign Penetration in Central European Manufacturing 7. Restructuring and Efficiency Upgrading with FDI 8. Production Specialization in Central European Manufacturing 9. FIEs and Productivity Convergence in Central Europe 10. The Impact of FDI on the Foreign Trade of CECs 11. FDI in the Balance-of-Payments Framework Index