The Impact of Enlargement on the Race for FDI

Christian Bellak

No 86, Department of Economics Working Paper Series from WU Vienna University of Economics and Business

Abstract: This chapter assesses the effects of "Eastern" EU-enlargement on the race for FDI and the policy implications. We start from the proposition that the evolving production patterns of incumbent and new member states determine the need for and the justification of location policy (LP) and FDI promotion policy (FDI-PP). On the basis of empirical production patterns, it is argued that while the specialisation outcome dominates in the short run, the convergence scenario is more likely to prevail in the medium term. Therefore, old and new EU-members will compete increasingly for the same type of FDI. How EU-enlargement per se affects the spatial distribution of inward FDI is described next. The role of FDI-PPs and LPs in an enlarged EU are discussed on the basis of the convergence outcome. Since the new economics of location competition and of FDI-promotion cast serious doubt on the economic justification and effectiveness of FDI-PP, the chapter concludes with a basic dilemma in the race for FDI: namely, the greater ineffectiveness of FDI incentives in the Single Market and fewer possibilities for differentiation of LPs. The latter is due to harmonisation pressures, which calls for innovative policy strategies by central and regional authorities.

Keywords: Multinational Enterprises; Foreign Direct Investment; Locational Competition; Location Policy (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://epub.wu.ac.at/804/ original version (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (https://epub.wu.ac.at/804/ [308 PERMANENT REDIRECT]--> https://epub.wu.ac.at/id/eprint/804 [302 FOUND]--> https://research.wu.ac.at/en/publications/f80df0b1-4c3b-4382-839a-81fb677c8871)

Related works:
Working Paper: The Impact of Enlargement on the Race for FDI (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wiw:wus005:804

Access Statistics for this paper

More papers in Department of Economics Working Paper Series from WU Vienna University of Economics and Business Welthandelsplatz 1, 1020 Vienna, Austria.
Bibliographic data for series maintained by WU Library ().