Regional development implications of foreign direct investment in Central Europe

Article abstract:

Foreign direct investment (FDI) has been accorded a central role in the post-communist economic transformation of Central and Eastern Europe. This paper examines the regional effects of FDI in Central Europe (Czech Republic, Hungary, Poland and Slovakia) in the 1990s. It challenges uncritical views of FDI and its role in regional economic transformations by considering its potentially adverse effects for regional economic development, such as the intensification of uneven development, the development of a dual economy, failure to develop linkages with local and regional economies, and its contribution to increased regional economic instability. A case-study of the Czech automotive components industry illustrates the regional economic effects of FDI in Central Europe in terms of stability of investment, its links with the regional economy and its effects on domestic research and development.