The spatial and sectoral distribution of multinational activities in Eastern Europe

The last three decades have witnessed a spectacular integration of the world economy. On the one hand, the impact of the globalization on the economies is related to the activity of firms operating on a "multi-national" scale. These firms acquire subsidiaries abroad, move part of their production processes to reach new markets or to benefit from the international division of labor. In addition, trade and investment liberalization between Eastern European countries and the European Union leads to a relocation of production activities within the enlarged area. This thesis carries out a thorough empirical analysis of the determinants of multinational activities in Eastern European countries. The analysis of these determinants is important since the stock of the European FDI in the transition countries of Eastern Europe has strongly increased during the nineties. It reaches 83% of the total stock of FDI in Czech Republic, and more than 50% of total stock of FDI in Romania. There are at least three reasons why the progressive integration of Eastern European countries into the European Union leads to a relocation of firm activities within the enlarged area. First, the removal of internal trade barriers allows multinational firms to rationalize and concentrate production in the low-cost locations of the enlarged area. Second, integration may induce foreign firms that previously exported to the European Union to locate there to take advantage of scale economies and reach internal markets. Third, the removal of internal tariffs barriers should increase competition between firms and lead to a relocation of multinational activities. These factors, which are taken from the new trade theories, are analyzed in this doctoral thesis. The aim is to study the spatial and industrial distribution of FDI in the new European Unions' members.



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