Foreign Direct Investment in Times of Global Economic Crisis: Spotlight on New Europe
AbstractThis paper examines the potential impact of the economic crisis, which started in 2008, on the dynamics global foreign direct investment, especially in the new member states of the European Union. The global economic crisis that hit the world in 2008 has forced scholars and policy makers alike to rethink their approaches to the global economy, in particular to financial markets (including stock exchanges and portfolio investment). It can be hypothesised that the crisis has been particularly devastating because it has resulted from the coincidence of three factors: a cyclical downturn in the world economy; a structural change that hit certain industries which used to be star performers in the global economy (especially the automotive industry); and the collapse of the previous model of the financial industry based on excesses. This paper asks how this crisis affects foreign direct investment flows, with special attention being paid to the question of which locations are set to lose the least and which ones are set to lose the most. In this respect, particular attention is paid to the activities of subsidiaries of multinational enterprises. These subsidiaries can follow different scenarios as a response to the global economic turmoil, including a reorganization of their production systems, and a reduction or closure of activities that are deemed to be less necessary for the continuation of activities. Finally, the paper examines the policy implications of the crisis. It challenges the view that rising economic nationalism (in the form of protecting one location against locations in other countries) would be the right answer to the problems created by corporate restructurings.
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Bibliographic InfoPaper provided by United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology in its series UNU-MERIT Working Paper Series with number 021.
Date of creation: 2009
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Web page: http://www.merit.unu.edu
foreign direct investment; credit crunch; foreign subsidiaries; Europe;
Other versions of this item:
- Filippov, Sergey & Kalotay, Kalman, 2009. "Foreign Direct Investment in Times of Global Economic Crisis: Spotlight on New Europe," UNU-MERIT Working Paper Series 021, United Nations University, Maastricht Economic and social Research and training centre on Innovation and Technology.
- F01 - International Economics - - General - - - Global Outlook
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
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- Ionara Costa & Sergey Filippov, 2008. "Foreign-owned subsidiaries: A neglected nexus between foreign direct investment, industrial and innovation policies," Science and Public Policy, Oxford University Press, vol. 35(6), pages 379-390, July.
- Zoltan Acs & Colm O’Gorman & Laszlo Szerb & Siri Terjesen, 2007.
"Could the Irish Miracle be Repeated in Hungary?,"
Small Business Economics,
Springer, vol. 28(2), pages 123-142, March.
- Zoltan Acs & Colm O'Gorman & Laszlo Szerb & Siri Terjesen, 2006. "Could The Irish Miracle Be Repeated in Hungary?," Papers on Entrepreneurship, Growth and Public Policy 2005-33, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Arjan de Haan, 2010. "A defining moment? China's social policy response to the financial crisis," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(6), pages 758-771.
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