The Investment-Promotion Machines: The Politics of Foreign Direct Investment Promotion in Central and Eastern Europe

A variety of foreign-led economies emerged in Central and Eastern Europe in the late 1990s. State economic strategies in the Visegrad Four region (V4) of the Czech Republic, Hungary, Slovakia and Poland have converged towards a distinct model of competition states. This article investigates the politics of investment attraction and promotion of particular investors within the states and regions in Central and Eastern Europe. It analyses coalitions of social actors which form in the process of bidding for investors and promoting them in the regions. These coalitions, the investment-promotion machines, can be understood as power blocs underpinning the competition state at the regional level. The analysis draws primarily on case studies of attraction and promotion of foreign direct investment (FDI) in the Czech Republic and Slovakia.     

The determinants of foreign direct investment inflows in the Central and Eastern European Countries: The importance of institutions

This study investigates the determinants of FDI inflows in six Central and Eastern European countries (CEEC) by incorporating the traditional factors and institutional variables over the 1996–2009 period. The study identifies whether and how these determinant factors differ across four investor countries (EU-15, the US, China, and Japan). The results verify the positive and economically significant role of GDP size, trade openness, EU membership, and institutions (measured by economic freedoms, state fragility, political rights, and civil liberties indices) on FDI inflows. The results also reveal the existence of notable differences in the determinant factors across four investor countries.     

The Role of FDI,Exports and Spillover Effects in the Regional Development of China

The objective of this analysis is to assess the impacts of export expansion, inward FDI, domestic investment and labour on the growth of China's Eastern, Central and Western regions using panel data over the period 1984 to 1998. A major contribution of the study is its tests for the presence of interregional spillover effects. The study indicates that both inward FDI and domestic investment stimulate growth in all three regions and for the PRC as a whole and that export expansion stimulates the growth of the PRC, Eastern and Central China, but not the West. Labour enhances the growth of the more traditional Western region, but not the more capital intensive Eastern seaboard or the PRC in its entirety. Finally, output growth spills over from the East to Western and Central China and from the Central area to Western China. These results are fully explained in the text.     

Legacies of State Socialism: A Comparative Study of Elite Attitudes towards EU Economic Competitiveness in Western and Central Eastern Europe

Abstract

The elites of Western Europe prefer social security for all citizens as the major aim of the EU, while the preference of Central and Eastern European elites is for a more globally competitive European economy. This disparity between elite preferences may be accounted for by the distinct electorates and elites’ responsive strategic calculations, or by the process of socialisation Central and Eastern European elites undergo during exposure to the EU. This article argues that the predominant reason for the difference in elite attitudes towards economic competition is the lasting effect of state socialism in Central and Eastern European countries.     

The Impact of Foreign Direct Investment (FDI) Inflows on Economic Growth in Barbados: An Engle-Granger Approach

The purpose of this article is to look at the impact of foreign direct investment (FDI) inflows on economic growth in Barbados in the long and short run from 1979 to 2008 with the use of the Engle-Granger two-step procedure. The study shows that in the long run, a 1 percent increase in FDI inflows will expand economic growth by 0.10 percent while in the short run, the relationship between FDI and economic growth will be positive but almost flat. These results imply that any policy by Government aimed at boosting economic growth using FDI inflows will have to be considered for the long run since Government could not rely on FDI inflows in the short run.     

Leninist beneficiaries? Pre-1989 legacies and the radical right in post-1989 Central and Eastern Europe. Some introductory observations

A central topos in the study of Central and Eastern European contemporary politics in general, and of its radical right politics in particular is the emphasis on the extraordinary relevance of history and geography. In fact, the entire transformation process after 1989 is often clothed in terms of historical and geographical categories, either as a “return of history” or a “return to Europe”, or both. In these various scenarios, the radical right claims a prominent place in this politics of return, and the study of this current echoes the more general concern, in the analyses of the region, with historical analogies and the role of legacies. Sometimes analogies are drawn between the post-1989 radical right and interwar fascism, in terms of a “Weimarization” of the transformation countries and the return of the pre-socialist, ultranationalist or even fascist past – the “return of history”. Others argue that since some Central and Eastern European party systems increasingly resemble their Western European counterparts, so does the radical right, at least where it is electorally successful – the “return to Europe”. According to yet another line of thought, the radical right in the region is a phenomenon sui generis, inherently shaped by the historical forces of state socialism and the transformation process and, as a result and in contrast to Western Europe, ideologically more extreme and anti-democratic while organizationally more a movement than a party phenomenon. In all these approaches, the key concepts of “legacies” and the radical right are often underspecified. This volume takes a closer look at the intersection of history or particular legacies, and the mobilization of the radical right in the post-1989 world of the region, while attempting to provide a sharper focus on key concepts. Regardless of the different approaches, all contributions show that with the radical right, a peculiar “syncretic construct” (Tismaneanu) has emerged in Central and Eastern Europe after 1989, which is derived from both pre-communist and communist legacies.     

Transition to a market economy and sustained growth. Implications for the post-Washington consensus

Transition to a market economy is a lengthy process comprised of various spheres of economic activities. The belief that a market economy can be introduced by “shock therapy” is wrong, and in several cases has caused more problems than it has solved. Since a market economy requires adequate institutional structures, transition can be executed only in a gradual manner. Despite the fact that so-called Washington consensus, i.e. a set of policies aiming to shift from stabilization to growth, was developed without concern for post-socialist transformation, these ideas have significantly influenced the path of thought and action in Eastern Europe and the former Soviet Union. After a decade of transition and lasting depression, a new, post-Washington consensus is developing. Major policy conclusions suggest that the core of emerging consensus, also based on the lessons from transitions, is institutional building. Only with strong institutions can liberalization and privatization put emerging post-socialist markets on the path of sustainable growth. Yet, to accomplish such a task the policy reforms must also take into consideration the need for equitable growth and the new role of the state. The latter must not retire from economic activities, but ought to change its role to support the reforms and integration of the post-socialist countries into the world economy in the era of globalization, of which the post-communist transition is an important part.     

Introduction

Central Eastern Europe (further CEE) has been thoroughly reconstructed during nearly a quarter of century since the fall of the Berlin wall and the end of the cold war. The CEE countries turned to the West for economic and technological advancement, for political and administrative models as well as for protection. The authors coming from eight different countries look at the place and role of the former member states of the Warsaw Pact in the new European and international constellation. This concept of CEE includes most pro-western states of the former ‘Eastern block’: the four countries of Central Europe (Poland, the Czech Republic, Slovakia and Hungary) and the Baltic states (Lithuania, Latvia and Estonia). There were many tumultuous political developments in and around the region within the last decade, and especially during the last five years when the financial crisis started to take its toll. While the Atlantic link of Central and Eastern Europe is still strong, many commentators have pointed out its wearing strategic meaning. The balance between the focus on the USA and the EU has shifted in favour of Europe. However, this shift has rather been an incomplete one due to the region's own political and economic problems. The aim of this special issue is to analyse the new constellation by looking at the CEE countries themselves, at their ability to react and adapt, produce sound political strategies and act on as national actors: through bilateral ties, regional co-operation, NATO and the EU. Also, the main external actors - the USA, Russia and Germany - are looked at as they directly influence the way how the CEE countries shape their policies.     

The League of Polish Families between East and West,past and present

Historical legacies play an important role in the rise of radical right parties in Central and Eastern Europe. This article conducts an in-depth study of the trajectory of a particular radical right party, the League of Polish Families, in a particular Central and East European country, Poland. The central objective of the article is to highlight that, although there are important similarities between the League of Polish Families and other radical right parties in both Central and Eastern Europe and Western Europe, the League of Polish Families differs in some respects, such as the composition of electorate and ideology from these parties. The article shows that the observed differences have their roots in the Polish historical legacy, that on some accounts deviates from the historical legacies present in other Central and East European countries.     

The changing nature of the transatlantic link: U.S. approaches and implications for Central and Eastern Europe

This article examines the changing security, economic and diplomatic components of the transatlantic link, with a particular focus on Washington's approach and implications for Central and Eastern Europe. The United States continues to play an essential role as security underwriter in the region, but the military dimension of the transatlantic relationship is transforming and will result in greater burdens on Europeans. Economic links between the U.S. and Central Europe are developing more strongly than generally understood, and the Transatlantic Trade and Investment Partnership is likely to drive both political and economic ties. Unconventional gas developments are enhancing U.S. engagement in European energy markets. Finally, the U.S. remains keen to engage its European partners on a broad agenda of global and regional issues and retains its own interests in working particularly with Central and Eastern European countries to lend stability to ‘wider Europe’.     

Can foreign direct investment help Poland catch up with the EU?

The paper examines the extent to which the inflow of foreign direct investment (FDI) helps Poland to catch up with the EU.FDI can facilitate the process of catching up mainly through transfer and diffusion of technology, which leads to upgrading of technological and innovative potential of a host country. The paper is aimed at assessing whether FDI is correlated with the innovation processes in different branches of the Polish industry. A regression analysis conducted in this paper has confirmed that, except for low-technology industries, FDI impacts Poland’s innovation efforts and thus helps Poland to catch up with the EU.     

Legacies and Leverage: EU Political Conditionality and Democracy Promotion in Historical Perspective

Previous studies have established strong and robust effects of EU political conditionality on democracy in the neighbouring countries. We test these effects against the claim that historical legacies condition the likelihood of successful democratisation—and possibly the EU's political conditionality as well. Based on a panel study of 36 countries of the Eastern and Mediterranean neighbourhood of the EU between 1988 and 2004, we show that cultural legacies of religious civilisation are indeed conducive to or inhibit democratisation, and reduce the effects of political conditionality, but they do not explain away the EU's role in promoting democratic consolidation.     

Challenges for EU governance through Neighbourhood Policy and Eastern Partnership: the values/security nexus in EU–Belarus relations

Whereas the European Union (EU) has had some effect on political and economic reforms in the Ukraine and Moldova, it almost completely failed to impress the regime and population of Belarus. Despite growing consensus at the EU level that the Union's policies for Eastern Europe cannot succeed without Belarus, few attempts have been made to account for the failure of EU governance in Belarus. Having recalled the current legal and institutional set-up of EU–Belarus relations, this article introduces the notion of the ‘values/security nexus’ to explain the limited impact of EU governance in Belarus. It argues that the highly contradictory normative objectives in the Union's current Neighbourhood Policy towards Belarus effectively undermine the EU's credibility in the country: idealist values of ‘winning the hearts and minds’ of the Belarusian population increasingly collide with traditional realist goals of protecting EU interests and the stability of the Belarusian state. By way of conclusion, the article highlights the challenges facing the EU's new Eastern Partnership, including Belarus.     

从美苏之间到美欧俄之间——1989年后中东欧国家的外交战略与大国关系的互动

在中东欧国家由苏联"卫星国"向北约和欧盟成员的转变中,苏联、美国、北约、欧盟及俄罗斯对中东欧国家的政策及它们之间的关系起到了至关重要、有时甚至是决定性的作用。正是在美苏对峙格局崩溃,美国成为世界唯一的超级大国,美、欧、俄的博弈渐次展开但远未构成三足鼎立的情况下,中东欧国家以加入北约与欧盟为主要内容的"回归欧洲"战略得以确立和实施。中东欧国家加入北约和欧盟对美、欧、俄关系产生了一定的影响,但不会从根本上改变与美、欧、俄之间现有的关系格局。     

The Development of Pensioners’ Interest Organisations in Central and Eastern Europe: A Comparison of the Czech and Slovene Cases

Studies of organised interests in Central and Eastern Europe have overlooked constituencies shaped by the welfare state such as retired people. The article compares the development, structure and strategies of pensioners’ interest organisations in the Czech Republic and Slovenia. It finds that sizeable, if poorly resourced, membership-based pensioners’ interest organisations have emerged, largely independently of trade unions, and integrated into interest representation systems. Although lack of resources and organisational problems hamper lobbying capacity, these groups retain mobilisation potential. Comparison suggests that legacies and modes of transition still shape pensioners’ interest organisations more than institutional structures or new population ageing strategies.     

Integrating the past: regional integration and historical reckoning in Central and Eastern Europe

This article considers how regional integration in Europe has informed processes of collective remembrance and transitional justice in Central and Eastern Europe. By taking the cases of Romania, Poland and the Czech Republic, two claims are made. First, although European institutions have not initiated top-down projects of historical reckoning, activists who have an interest in promoting engagement with the recent past have been able to draw the political, financial and/or judicial weight of European institutions behind particular reckoning initiatives, on an ad hoc basis. Second, the nature of the projects that have been realized with the assistance of European resources has varied across the region, according to the extent of prior efforts to promote collective remembrance and transitional justice at the national level. Where there have previously been constraints on historical reckoning, activists have drawn “Europe” behind efforts to promote national-level confrontations with particularly national experiences of communist rule. By contrast, where there has previously been extensive state sponsorship of collective remembrance projects and/or processes of transitional justice, European resources have been used in support of efforts to raise awareness of the repressions of communist rule, and transitions from that system of rule, among a wider, international audience.     

Innovation and growth in traditional agriculture of the lower Volta,Ghana

This article addresses the important question of whether foreign direct investment enhances economic growth and labour productivity in Mexico, both from a theoretical and empirical perspective. After briefly reviewing the Mexican experience with net FDI inflows during the 1990s, the article presents a simple endogenous growth model which explicitly incorporates any positive (negative) externalities generated by additions to the foreign capital stock. Using cointegration analysis, the article estimates a dynamic labour productivity function for the 1960-95 period that includes the impact of the growth rate in the stocks of both private and foreign capital (as opposed to the flows) and the economically active population (EAP) (rather than the rate of population growth). The error correction model (ECM) estimates suggest that increases in both private ad (lagged) foreign investment spending, as well as the rate of growth in exports, have a positive and economically significant effect on the rate of labour productivity growth. In addition, the results show that increases in the EAP have a negative and statistically significant effect on the rate of labour productivity growth, while changes in the government consumption variable have a negative but marginally significant impact. The error correction terms of the estimated models are negative and statistically significant, thus suggesting that deviations of actual labour productivity growth from its long-run value are corrected in subsequent periods. Finally the article generates historical simulations from the estimated ECM's and offers some policy recommendations to enhance the positive externalities associated with FDI inflows.     

Continuity and change in Russia's policy toward Central and Eastern Europe

The accession of the CEE states to NATO and the European Union has put an end to the geopolitical ambiguity and implicit insecurity in the region between Russia and the so-called ‘Old Europe’. Instead of being an area of great powers' rivalry, elements of ‘buffer belts’ lacking meaningful strategic options, objects of raw Nazi-Soviet deals, or zones under Russian occupation and domination, the three Baltic States and the Visegrad group countries became full-fledged members of the European Union and were given NATO's security guarantees. By the middle of the 2000s, one would conclude that traditional geopolitics had ended in this region.However, the changes in the strategic situation in CEE have not changed the deep rooted moving forces and long-term strategic goals of the Russian policy toward the region. Moscow seeks to have the position, as its official rhetoric says, of an ‘influential centre of a multipolar world’ that would be nearly equal to the USA, China, or the EU. With this in view Moscow seeks for the establishment of its domination over the new independent states of the former USSR and for the formation of a sphere of influence for itself in Central Eastern Europe. If it achieves these goals, then Europe may return once again to traditional geopolitics fraught with great power rivalries and permanent instabilities radiating far beyond CEE borders.Yet a few questions remain. Has Russia come to the conclusion that attempting to restore its privileged position of influence in Central-Eastern Europe is wrong? Has Russia enough power to threaten the CEE countries? How credible are NATO's security guarantees? How may Russian behavior in CEE affect a wider European geopolitical context? These questions are appropriate in the light of Russia's ‘resurgence’ as a revanchist power and because Russia is, and most probably will remain in the next five to ten years, a weighty economic and strategic factor in areas along the Western borders of the former USSR.     

Technology Transfer: A Mode of Collaboration Between the European Union and China

BEING ONE OF THE EUROPEAN UNION'S MAIN TRADING PARTNERS-ranking fourth in terms of both imports and exports expressed in value-China has emerged as an indispensable market for any multinational enterprise willing to avail itself of the opportunities represented by one of the fastest growing economies at the turn of the century. In order to close the technological gap with the developed economies of the world, China launched its open door policy in the late 1970s, the priority of which was to acquire foreign technology, capital, skills and management, as well as to cut dependence on imports. Foreign direct investment (FDI) and collaborative ventures in China, as important channels for technology transfer, have consequently grown massively. Owing to its size and development requirements, the People's Republic of China is one of the largest importers of technology in the world. During the 1950s it used to import technology from the former Soviet Union and from other East European countries. Since the late 1960s the EU and Japan have been the main sources of Chinese technology imports. Today, the EU-15 is China's major supplier of advanced technology and equipment. The EU represents 43.8% of China's total imports of technology (US$764.4 million), a share which is well ahead of that of Japan (at 25.5%) and of the United States (18.3%).1 These figures need to be appraised against the background of poor EU performance in terms of FDI in China compared with its Japanese and American counterparts. Over the past 15 years total FDI from the EU accounted for less than 5% of total direct investment from overseas firms in China (Qian, 1998). Nevertheless, in the recent past a greater awareness among EU policy makers and businesses of the potential represented by the Chinese market has emerged. The Essen European Council of 1994 endorsed a 'new Asia strategy', which 'called for a higher profile of the EU in Asia' (CEC, 1995, p. 17) and which broadly involves developing a long-term relationship with China. A 'Technology Window' programme was emphasised in the policy, which encourages EU companies to embrace broadly the business opportunities on offer, and to transfer much needed technology to China. This article sees technology transfer (TT) as a practical and strategic means of increased collaboration between the EU and the Chinese economies. Research and studies that have touched on this issue are rare, mainly because the demarcation line between technology transfer and technology imports is blurred. Technology transfer differs from technology imports in conceptual as well as in real terms, as we discuss in this article. It goes along with FDI which requires a full involvement in occupying a new market. After an attempt at defining technology transfer and clarifying the optimal context in which TT can be performed, we shall briefly assess the positive impact of technology transfer from the standpoint of both the transferor and the receiver. We then provide a concise review of Sino-EU relations, with a specific emphasis on technology transfer in two selected industries.     

Expanding the levels of analysis of fdi for improved understanding of policy issues: the case of mexico

Foreign Direct Investment (FDI) inflows are a key component of the restructuring and external integration now underway in many Latin American national economies. This paper suggests that understanding of policy issues concerning FDI can be enriched by two complementary shifts in the levels of analysis of FDI, each of which entails more detailed attention to the strategies and operations of multinational corporations (MNCs). At the macro-level, we show why it is beneficial to expand beyond the normal analytic concern with aggregate total FDI flows to focus instead on the separate, disaggregated components of those flows--that is, equity, reinvested earnings and other long-term and short-term capital flows between parent firms and their affiliates, as recorded in the national balance of payments capital account. The microlevel shift emphasizes the importance of focusing on varieties of types of FDI, not only across different foreign investors but within individual companies as well. It demonstrates the significance of switching from the usual concentration on firms as a whole to instead accentuating examination of individual projects and products--especially the dichotomy between market-access projects producing for the host country domestic market and production-efficiency projects producing for export markets, including the home country market. These two shifts in the level of analysis complement one another, and they interact in the sense that the mix of component flows can depend in part on the type of FDI. These analytic themes are developed using evidence concerning FDI in Mexico, with special reference to the automotive industry. Such improved comprehension of FDI is particularly germane for Latin American countries that are contemplating liberalization of foreign direct investment rules or have already undertaken them and witnessed the ensuing increase of inbound FDI.