EU enlargement and consequences for FDI assisted industrial development
Rajneesh Narula & Christian Bellak
#2008-067
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.
Keywords: FDI, EU, multinationals, absorptive capacity, globalization, development,
enlargement
JEL classification: F02, F23, O14, O19
UNU-MERIT Working Papers
ISSN 1871-9872