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EU enlargement and consequences for FDI assisted industrial development

  • Christian Bellak

    ()

    (Department of Economics, University of Economics and Business Administration, Vienna)

  • Rajneesh Narula

    ()

    (School of Management, University of Reading)

Many of the new member states as well as candidate and accession countries of the EU are confident that membership will result in substantially increased inward foreign direct investment (FDI) in manufacturing. This paper discusses the policy issues and challenges that cohesion and accession countries face, applying lessons that by now have become mainstream in the parallel discussion of FDI-assisted development in the developing economies. We argue that globalisation has attenuated the benefits that accrue from EU membership for latecomers, and they must now compete for FDI not just with other European countries but also with non- EU emerging economies. We posit that they should not base their industrial development strategy on mere passive reliance of FDI flows without considering how to concatenate their industrial development and the nature of the MNE activities they attract.

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Paper provided by Henley Business School, Reading University in its series Economics & Management Discussion Papers with number em-dp2008-69.

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Length: 27 pages
Date of creation: 21 Nov 2008
Date of revision:
Handle: RePEc:rdg:emxxdp:em-dp2008-69
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