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Firm-level data sets on foreign manufacturing plants in four Central and Eastern European Countries are used in this paper, to trace their location and estimate the determinants of their choice processes. A nested logit model as developed by McFadden (1974) is used in the analysis. A central focus of the analysis is foreign direct investment (FDI) which is a good indicator of where location of foreign investments is made. Several reasons explain the need for mapping the location of FDI. First of all, it facilitates understanding the real competitiveness of regions and countries in providing location advantages able to complement multi-national enterprises’ (MNE) specific advantages. Secondly, it directly shows the distribution of the benefits usually associated with FDI. Finally, an understanding of FDI location decisions is important for policy makers who believe that MNEs may offer a positive contribution to the economic development of disadvantaged areas and thus correct potential regional imbalances. The main results show that sector specific factors affect the choice of the final location. These unobserved characteristics influence both the determinants and the structure of MNEs location choice process. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of new capital accumulation on capital-labor and capital-output ratios in 26 transition economies (TE) of Central and Eastern Europe and former USSR. Using a perpetual inventory method, we estimate the amount of capital accumulated in these countries since the start of market reforms and compare it to results for developed countries and largest emerging market economies. We found that on per worker basis, capital accumulation in TE is lagging far behind that of their mature market neighbors in European Union. Disparities in capital-output ratios were not as pronounced, as higher capital-labor ratios were reached in economies with higher levels of GDP per capita. Regression analysis indicates that capital per worker was accumulated faster in TE having higher saving rates, relatively higher priced labor, closer proximity to Western Europe, and higher manufacturing share in the economy. The K/Y levels were influenced by the same determinants except for relative input costs. [ABSTRACT FROM AUTHOR]

On the basis of existing data on foreign direct investment (FDI) in Central European economies in transition, the paper evaluates some aspects of FDI development implications for these economies. Too high expectations about FDI development implications could lead to a kind of restrictive reaction which would limit future inflow of greenfield FDI. [ABSTRACT FROM AUTHOR]

At the centre of the interface between the developmental needs of national industry and evolutionary processes in the MNEs' subsidiaries are knowledge-seeking and knowledge-generation processes. Based on new survey evidence, we examine the strategies of MNE in Central and Eastern Europe (CEE). In particular, we investigate the knowledge characteristics of MNE subsidiaries in CEE by analysing the roles of subsidiaries, market orientation and sources of technology over time. Key Results Initially market-seeking operations dominated in CEE, with little integration of CEE subsidiaries into global MNE networks. The relative scarcity of export-oriented efficiency-seeking operations in CEE can be explained by persistent high-levels of uncertainty in CEECs and resistance from MNEs' longer-established Western European manufacturing subsidiaries. European MNEs pursue the most country-centred strategies while the Asian MNEs have the highest export-orientation. Also it is found that CEE subsidiaries in motor vehicle and mechanical engineering have the highest export-orientation to European Union markets. However we suggest that product differentiation using CEE creative capabilities (i.e. technology and engineering expertise) rather than cost-competitiveness, may ultimately secure a more sustainable and embedded entry into MNEs' wider European (or global) networks. Host governments may consider targeted and coherent policies that reduce business uncertainties and, thus, may sway MNEs to locate higher value-added activities in their country. [ABSTRACT FROM AUTHOR]