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Internationalization and Embeddedness in East-Central European Transition: The Contrasting Geographies of Inward Investment in the Czech and Slovak Republics

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  • Petr Pavlinek
  • Adrian Smith

Abstract

PAVLINEK P. and SMITH A. (1998) Internationalization and embeddedness in East-Central European transition: the contrasting geographies of inward investment in the Czech and Slovak Republics, Reg. Studies 32, 619-638. Inward investment has been accorded a central role in the internationalization and restructuring of East-Central European economies. This paper undertakes a critical examination of the capacity of inward investment projects in the Czech and Slovak Republics to generate forms of embedded regional restructuring. The analysis points to the profound, yet uneven and contradictory regional transformations resulting from inward investment in three industrial sectors in the Czech Republic and Slovakia: automobile manufacturing; light engineering; and tobacco and food processing. The paper also develops a number of conceptual arguments around the determinants of integrated and embedded inward investment. Wedraw upon two forms of regional restructuring to analyse how and why differential forms of embeddedness develop: 'defensive restructuring' through a focus on low wage, cost advantages and largescale worker flexibility; and 'offensive restructuring' in which there is a conservation and enrichment of skills, connected to high wages, an upgrading of productivity and important levels of co-operation and partnership between economic and institutional actors. We identify two main forms of transformation from an analysis of case study firms. First, we argue that forms of path dependent embeddedness are apparent when building upon former industrial strengths and traditions by an investor occurs, rather than their marginalization. In other words, where path dependent transformations of networks occurs, inward investment tends to have a more dynamic impact upon a region and does not result in the truncated industrialization of isolated FDI plants. We also argue that such forms of embeddedness are not without their significant costs …

Suggested Citation

  • Petr Pavlinek & Adrian Smith, 1998. "Internationalization and Embeddedness in East-Central European Transition: The Contrasting Geographies of Inward Investment in the Czech and Slovak Republics," Regional Studies, Taylor & Francis Journals, vol. 32(7), pages 619-638.
    • Handle: RePEc:taf:regstd:v:32:y:1998:i:7:p:619-638
    DOI: 10.1080/00343409850119517
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    References listed on IDEAS

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    1. Philip Mccann, 1997. "How Deeply Embedded is Silicon Glen? A Cautionary Note," Regional Studies, Taylor & Francis Journals, vol. 31(7), pages 695-703.
    2. D. Stark, 1996. "Recombinant Property in East European Capitalism," Voprosy Ekonomiki, NP Voprosy Ekonomiki, vol. 6.
    3. Adrian Smith, 1998. "Reconstructing the Regional Economy," Books, Edward Elgar Publishing, number 1322.
    4. Ivan Turok, 1997. "Linkages in the Scottish Electronics Industry: Further Evidence," Regional Studies, Taylor & Francis Journals, vol. 31(7), pages 705-711.
    5. Adam Swain, 1998. "Governing the Workplace: The Workplace and Regional Development Implications of Automotive Foreign Direct Investment in Hungary," Regional Studies, Taylor & Francis Journals, vol. 32(7), pages 653-671.
    6. Kevin Morgan, 1997. "The Learning Region: Institutions, Innovation and Regional Renewal," Regional Studies, Taylor & Francis Journals, vol. 31(5), pages 491-503.
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    Cited by:

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    2. Danskin, Paula & Dibrell, Clay & Kedia, Ben L., 2005. "The evolving role of cooperation among multinational corporations and indigenous organizations in transition economies: A migration away from confrontation," Journal of World Business, Elsevier, vol. 40(3), pages 223-234, August.
    3. Petr Pavlinek, 2002. "The Role of Foreign Direct Investment in the Privatisation and Restructuring of the Czech Motor Industry," Post-Communist Economies, Taylor & Francis Journals, vol. 14(3), pages 359-379.
    4. Mockaitis, Audra I. & Vaiginiene, Erika & Giedraitis, Vincent, 2006. "The internationalization efforts of lithuanian manufacturing firms--strategy or luck?," Research in International Business and Finance, Elsevier, vol. 20(1), pages 111-126, March.

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