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Globalisation, EU expansion and consequences for MNE location

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  • Narula, Rajneesh

    (MERIT)

Abstract

Many of the EU accession countries are confident that membership will result in substantially increased inward foreign direct investment (FDI). At the same time, other peripheral EU members (such as Spain and Portugal) are concerned that FDI will be displaced to these new countries. I postulate that the new members cannot expect the same increased FDI flows that resulted to earlier EU entrants. Both groups of countries cannot base their industrial development strategy on passive reliance on such flows. Reliance on low costs and other ''generic'' advantages such as basic infrastructure is myopic in a globalised world. Benefiting from FDI requires a comprehensive strategy to build up domestic absorptive capacity and upgrading of the quality of their location advantages, since they are faced with increased competition for FDI not just from other European countries but also from other parts of the world, most notably Asia.

Suggested Citation

  • Narula, Rajneesh, 2005. "Globalisation, EU expansion and consequences for MNE location," Research Memorandum 003, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:umamer:2005003
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    References listed on IDEAS

    as
    1. Blomstrom, Magnus & Kokko, Ari, 1997. "How foreign investment affects host countries," Policy Research Working Paper Series 1745, The World Bank.
    2. Narula, Rajneesh, 2004. "Understanding absorptive capacities in an "innovation systems" context: consequences for economic and employment growth," Research Memorandum 004, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    3. Ramos, Joseph, 2000. "Policy Directions for the New Economic Model in Latin America," World Development, Elsevier, vol. 28(9), pages 1703-1717, September.
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