IDEAS home Printed from
   My bibliography  Save this paper

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.

Suggested Citation

  • Christian Bellak & Rajneesh Narula, 2008. "EU enlargement and consequences for FDI assisted industrial development," Economics & Management Discussion Papers em-dp2008-69, Henley Business School, Reading University.
  • Handle: RePEc:rdg:emxxdp:em-dp2008-69

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. C. Bellak & M. Leibrecht & R. Stehrer, 2010. "The role of public policy in closing foreign direct investment gaps: an empirical analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 37(1), pages 19-46, February.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Altomonte, Carlo & Guagliano, Claudia, 2003. "Comparative study of FDI in Central and Eastern Europe and the Mediterranean," Economic Systems, Elsevier, vol. 27(2), pages 223-246, June.
    4. Sanjaya Lall, 2013. "Reinventing Industrial Strategy: The Role Of Government Policy In Building Industrial Competitiveness," Annals of Economics and Finance, Society for AEF, vol. 14(2), pages 785-829, November.
    5. Breuss, Fritz & Egger, Peter & Pfaffermayr, Michael, 2001. "The impact of Agenda 2000's structural policy reform on FDI in the EU," Journal of Policy Modeling, Elsevier, vol. 23(7), pages 807-820, October.
    6. Kimberly A. Clausing & Cosmina L. Dorobantu, 2005. "Re-entering Europe: Does European Union candidacy boost foreign direct investment?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(1), pages 77-103, January.
    7. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    8. Paola Criscuolo & Rajneesh Narula, 2008. "A novel approach to national technological accumulation and absorptive capacity: aggregating Cohen and Levinthal," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(1), pages 56-73.
    9. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
    10. Buch, Claudia M. & Kokta, Robert M. & Piazolo, Daniel, 2003. "Foreign direct investment in Europe: Is there redirection from the South to the East?," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 94-109, March.
    11. Sanjaya Lall & Carlo Pietrobelli, 2002. "Failing to Compete," Books, Edward Elgar Publishing, number 2360.
    12. Aurora Galego & Carlos Vieira & Isabel Vieira, 2004. "The CEEC as FDI Attractors: A Menace to the EU Periphery?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(5), pages 74-91, September.
    13. Lall, Sanjaya & Narula, Rajneesh, 2004. "FDI and its role in economic development: Do we need a new agenda?," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    14. Frank Barry, 2004. "Prospects for Ireland in an Enlarged EU," The World Economy, Wiley Blackwell, vol. 27(6), pages 829-852, June.
    15. G R G Benito & B Grøgaard & R Narula, 2003. "Environmental influences on MNE subsidiary roles: economic integration and the Nordic countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(5), pages 443-456, September.
    16. Christian Bellak & Markus Leibrecht, 2007. "How to Make FDI in Central and Eastern European Countries Sustainable," Chapters,in: Foreign Direct Investment in Europe, chapter 15 Edward Elgar Publishing.
    17. Christian Bellak & Markus Leibrecht & Jože P. Damijan, 2009. "Infrastructure Endowment and Corporate Income Taxes as Determinants of Foreign Direct Investment in Central and Eastern European Countries," The World Economy, Wiley Blackwell, vol. 32(2), pages 267-290, February.
    18. Garmel, Kateryna & Maliar, Lilia & Maliar, Serguei, 2008. "EU eastern enlargement and foreign investment: Implications from a neoclassical growth model," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 307-325, June.
    19. Klaus E Meyer & Mike W Peng, 2005. "Probing theoretically into Central and Eastern Europe: transactions, resources, and institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(6), pages 600-621, November.
    20. Ramos, Joseph, 2000. "Policy Directions for the New Economic Model in Latin America," World Development, Elsevier, vol. 28(9), pages 1703-1717, September.
    21. Kalotay, Kalman, 2004. "The European flying geese: New FDI patterns for the old continent?," Research in International Business and Finance, Elsevier, vol. 18(1), pages 27-49, April.
    22. Joze Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
    23. Brenton, Paul & Di Mauro, Francesca, 1999. "The Potential Magnitude and Impact of FDI flows to CEECs," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 59-74.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Magdalena Radulescu & Elena Jianu, 2011. "FDIs in Spain after its EU Accession. Spanish Investments in Romania and How can be used Spanish Experience for Romania’s Development," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(2), pages 233-256.
    2. Leonhard Plank & Cornelia Staritz, 2013. "‘Precarious upgrading’ in electronics global production networks in Central and Eastern Europe: the cases of Hungary and Romania," Brooks World Poverty Institute Working Paper Series ctg-2013-31, BWPI, The University of Manchester.
    3. Magdalena RADULESCU & Elena Nolica DRUICA, 2011. "FDIs and investment policy in some European countries after their EU accession. Challenges during the crisis," Romanian Journal of Economics, Institute of National Economy, vol. 33(2(42)), pages 169-183, December.
    4. Martin Falk, 2012. "Determinants of Greenfield Investment in Knowledge Intensive Business Services," FIW Research Reports series IV-002, FIW.
    5. Martin Falk, 2013. "New empirical findings for international investment in intangible assets," WWWforEurope Working Papers series 30, WWWforEurope.
    6. Nadja Walch & Julia Wörz, 2012. "The Impact of Country Risk Ratings and of the Status of EU Integration on FDI Inflows in CESEE Countries," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 8-26.
    7. Gábor HUNYA & Sándor RICHTER, 2011. "Mutual trade and investment of the Visegrad countries before and after their EU accession," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2, pages 77-91, December.
    8. Uros Delevic & Irina Heim, 2017. "Institutions In Transition: Is The Eu Integration Process Relevant For Inward Fdi In Transition European Economies?," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(1), pages 16-32.

    More about this item

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rdg:emxxdp:em-dp2008-69. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Pearson). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.