Foreign diect investment incentral and eastern europe

▼ ▼ ▼ ▼ ▼ ▼ FOREIGN DIRECT INVESTMENT IN CENTRAL AND EASTERN EUROPE Post-crisis Perspectives ▼ ▼ ▼ ▼ Edited by Balázs Szent-Iványi ▼ ▼ ▼ STUDIES IN ECONOMIC TRANSITION General Editors: Jens Hölscher and Horst Tomann ▼ Studies in Economic Transition Series Editors Jens Hölscher The Business School Bournemouth University Bournemouth, United Kingdom Horst Tomann Department of Economic Policy and Economic History Freie Universitaet (FU) Berlin Berlin, Germany This series brings together theoretical and empirical studies on the transformation of economic systems and their economic development The transition from planned to market economies is one of the main areas of applied theory because in this field the most dramatic examples of change and economic dynamics can be found It is aimed to contribute to the understanding of specific major economic changes as well as to advance the theory of economic development The implications of economic policy will be a major point of focus More information about this series at http://www.springer.com/series/14147 Balázs Szent-Iványi Editor Foreign Direct Investment in Central and Eastern Europe Post-crisis Perspectives Editor Balázs Szent-Iványi Aston Centre for Europe Aston University Birmingham, UK Institute of World Economy Corvinus University Budapest Budapest, Hungary Studies in Economic Transition ISBN 978-3-319-40495-0 ISBN 978-3-319-40496-7 (eBook) DOI 10.1007/978-3-319-40496-7 Library of Congress Control Number: 2016956076 © The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland  To Benedek, Aron, and Gyöngyi Contents Introduction: The Changing Patterns of FDI Balázs Szent-Iványi Post-crisis Crossroads for FDI in CEE Kálmán Kalotay Czech FDI Performance: Between Global Value Chains and Domestic Reforms Tereza De Castro and Pavel Hnát 51 Foreign Direct Investment in Slovakia: The Tatra Tiger Gone Tame? Martin Grancˇay and N ora Grancˇay 77 Latecomers May Be Admitted: Foreign Direct Investment Between the CEE Countries Magdolna Sass 99 23 vii viii 10 11 Contents Upgrading and Value Capture in Global Value Chains in Hungary: More Complex than What the Smile Curve Suggests Andrea Szalavetz 127 Inequalities of Accumulation: The Case of Central and Eastern Europe Annamaria Artner 151 Multinational Banks: Protective Factors of Financial Stability in Central and Eastern Europe? Gábor Kutasi 171 Investment Promotion in the Visegrad Countries: A Comparative Analysis    Dani Agnes Tőrös, Adám Me´száros, and Akos 193 Competitiveness and Investment Promotion in Bulgaria and Romania Sorin Gabriel Anton 219 Conclusions: Prospects for FDI-Led Development in a Post-crisis World Balázs Szent-Iványi 241 Index 259 Notes on Contributors Sorin Gabriel Anton is Associate Professor of Finance at Alexandru Ioan Cuza University of Iasi, Romania His research interests are in the fields of international finance, financial risk management, and corporate finance Annamária Artner is a senior research fellow at the Institute of World Economics, Centre for Economic and Regional Studies of the Hungarian Academy of Sciences, Budapest, Hungary Her main research interests are labour markets, crises, and the global accumulation of capital Tereza De Castro is Lecturer in Global Economy and Development Economics at the Faculty of International Relations, University of Economics, Prague, Czech Republic She specializes in trade and investment relations between Europe and the BRICS countries Ákos Dani is a PhD candidate at Corvinus University Budapest, Hungary His main research area is the international monetary system Martin Grančay is the Director of the Project Center at the Faculty of Chemical and Food Technology at the Slovak University of Technology in Bratislava, Slovakia, and an independent researcher His work focuses primarily on gravity models of trade and the economics of international civil aviation Nóra Grančay is an independent researcher She holds a PhD degree from the University of Economics in Bratislava, Slovakia ix x Notes on Contributors Pavel Hnát is Associate Professor of World Economy and European Integration at the Faculty of International Relations, University of Economics, Prague, Czech Republic His latest monograph examines the Political Economy of Global Imbalances Kálmán Kalotay is an Economic Affairs Officer at the United Nations Conference on Trade and Development (UNCTAD) in Geneva, Switzerland, and Honorary Professor of Corvinus University Budapest, Hungary Gábor Kutasi is an associate professor at the Institute of World Economy, Corvinus University Budapest, Hungary Ádám Mészáros is an assistant professor at the International Business Research Centre, Corvinus University Budapest, Hungary His main research interests are foreign direct investment and research, development, and innovation policy Magdolna Sass is a senior research fellow at the Centre for Economic and Regional Studies of the Hungarian Academy of Sciences, Budapest, Hungary Her main research areas are international trade, foreign direct investments, and related policies, with special attention to the East Central European region Andrea Szalavetz is a senior research fellow at the Centre for Economic and Regional Studies of the Hungarian Academy of Sciences, MTA MRTK, Budapest, Hungary Her research areas are global value chains and international business Balázs Szent-Iványi is Lecturer in Politics and International Relations at the Aston Centre for Europe, Aston University, Birmingham, UK He also holds an associate professor position at the Institute of World Economy, Corvinus University Budapest, Hungary His work focuses on international development politics and the relations between multinational corporations and the state Ágnes To˝rös is an economic analyst, who received her PhD degree from Corvinus University Budapest She gathered professional experience in governmental institutions and spent several years in positions dedicated to investment promotion 11 Conclusions: Prospects for FDI-Led Development 251 As shown in Chap 5, there are a number of large multinationals headquarted in the CEE region, and they are active outward investors, especially towards other countries in the region The model of the investment development path used in Chap implies that further development and international expansion of these MNCs will be a more or less automatic consequence of economic growth in CEE This approach falls into the same linear fallacy as the upgrading narrative There are a number of issues with the existing CEE MNCs, responsible for the bulk of outward investments, which questions just how much they would be able to fill the role of lead firms engaged in intangible activities First, there are still relatively few MNCs which have their headquarters in CEE countries Second, many of the outward investors from CEE are actually not headquarted in the region but are engaging in indirect FDI on behalf of lead firms located elsewhere (see Chap for more details) Third, many larger MNCs are active in less innovative sectors, such as energy While CEE-based larger MNCs are also present in more innovative sectors like banking or pharmaceuticals, their international expansion has so far focused on accessing markets, and they are thus in the early stages of developing their global (regional) value chains Nevertheless, these may hold some promise There is also a different breed of MNCs in the CEE region: small, highly innovative born global companies Their investments abroad are relatively small, but many of them have carved niches for themselves globally Companies like Prezi and iGO Navigation from Hungary, CDProjekt Red from Poland, Aeromobil and Staffino from Slovakia or Avast from the Czech Republic have all become globally known names within their respective areas, but they are still small Kharas and Kohli (2011) argue that in order to leave the middle income trap, countries need to focus on specialisation and develop global and regional champions, first in specific niche areas As evidenced by the few examples mentioned above, this is already happening, but these companies are exceptions rather than the norm Increasing the number of such small, innovative companies, some of which could evolve into global value chains with lead firms located in the region, is possibly the soundest approach to increasing local value capture This requires a holistic approach by states, with industrial policy, broadly 252 B Szent-Iványi defined to include science and innovation policies, taking a key role and linking to policies in the fields of education (all levels), entrepreneurship and trade and investment promotion As argued by Szalavetz (2015), the global crisis has made states more open to devising deliberate strategies to improve national economic performance, although these processes were present before the crisis as well, and despite the seeming triumph of neoliberalism, state activism never receded The crisis however definitely made the return of industrial policy especially pronounced, with states engaging in large bailouts, subsidy programmes and nationalisations New industrial policies however are very different than the ones during the 1970s: they are less focused on supporting declining sectors and have generally become smarter and horizontal by targeting specific areas such as innovation, small firms or lagging areas, instead of specific companies Any industrial policy aimed to support the growth and development of innovative CEE-led global firms needs to follow this guidance and should refrain from picking national champions Rather, they should focus on developing an environment in which these champions can emerge and thrive These policies need to have several elements First, governments must focus on easing entry even further by supporting entrepreneurship and indeed actively promoting it People in CEE countries are generally more averse towards starting their own business than in Western advanced economies (see Páger and Szerb 2014), and this needs to be changed Second, governments need to ensure that start-ups have sufficient access to funding, both through government funded grants and also by dynamising the rather sluggish private start-up and venture-funding markets of the region Third, governments need to ensure that talent is available for these companies, which involves promoting education in science, technology and engineering subjects, supporting the entry of highly skilled migrants and providing incentives for expatriate talent to return Fourth, these companies need support in their internationalisation and growth, including advice on foreign locations and bespoke support in setting up operations abroad Multinational affiliates will also benefit from many of these policies, especially in terms of ensuring the availability of talent, and thus, more controversially, governments might need to ensure 11 Conclusions: Prospects for FDI-Led Development 253 that born global start-ups from the region are not priced out in the labour market Clearly, governments across the region are engaged in policies like these, at least on the level of lip service Very few however have built them into a holistic development strategy with the ultimate goal of increasing domestic value capture Also, it is questionable just how much government institutions in the region are up to implementing these tasks (see also Birdsall and Fukuyama 2011, 50), as agencies tasked with promoting entrepreneurship, exports or foreign investments can have deficiencies in capacities, be inflexible and lack an understanding of dynamic global markets These agencies need to be developed and their capacities significantly strengthened As a further difficulty, some of the steps outlined above might also go against international rules, such as the EU’s regulations on state aid or regulations of the World Trade Organisation on national treatment As Szalavetz (2015) however notes, many contemporary examples of industrial policy, if well designed, are rather murky in terms of whether they violate international rules or not There is also a large contradiction in this area: the EU heavily scrutinises state aid to national actors but has very little influence on the large incentive packages that states provide to foreign investors The policies to support greater national value capture will not have overnight results, but in the long term, if well planned and implemented, can help the CEE countries in avoiding the low value capture trap Also, they could be seen as a potentially better use of scarce public money than providing large financial incentives and tax breaks for investing multinationals This is by no means to say that governments should give up their investment promotion policies Foreign companies can be beneficial, and targeting higher value added investments needs to continue As pointed out in Chap 6, the CEE countries have little choice in this It is indeed unlikely that any government would willingly give up promoting foreign investment: the creation or expansion of a multinational affiliate attracts significant media attention and is thus an excellent opportunity for politicians to show how they are engaged in creating jobs Nonetheless, investment promotion policies need to change As argued by Rugraff (2008), the CEE countries have adopted policies which are too friendly to FDI and have hampered the emergence of strong indigenous firms 254 B Szent-Iványi FDI policies need to focus more on supporting greater local value capture and the emergence of locally headquarted value chains One way to this is to put a greater emphasis on and potentially redistribute resources to ensuring that domestic actors not only integrate into global value chains as suppliers but are able to learn and develop from these relationships Many of today’s large multinationals started off as relatively small suppliers to others Obviously, the policy steps outlined above only form a crude blueprint of what needs to be done to avoid the low value capture trap Significantly more research will be needed to support governments in developing the specific details and also investigate the political economy of implementing and sustaining such policies or expanding existing ones One further point is worth mentioning There are also examples in the CEE region of how industrial policy should not be done Focusing on “national capitalism,” discussed in Chap 2, is unlikely to be an effective strategy Hungary has gone the farthest in developing some form of stateled capitalism, where the state is clearly trying to develop a strong Hungarian-owned corporate sector through government-backed loans, privatisation and favouring certain companies in public procurement Simultaneously, it is also punishing multinationals by introducing additional taxes in sectors dominated by them, such as banking and retail, and in case of public utilities, interfering directly into their pricing What is emerging is a form of crony capitalism, where beneficiaries of government support are almost exclusively corporations with close ties to the government This new Hungarian business elite has no incentives to be innovative or competitive, as the government ensures their survival and continued access to support These companies are highly 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Competition and Change, 19 (1), 70–83 11 Conclusions: Prospects for FDI-Led Development 257 Szalavetz, A (2016) Post-crisis developments in global value chains—Example of foreign investors’ Hungarian subsidiaries (CERS HAS IWE working papers 219) Szentes, T (2003) World economics The political economy of development, globalisation and system transformation Budapest: Akademiai Kiado UNCTAD (2003) World investment report 2003 FDI policies for development: National and international perspectives New York/Geneva: United Nations Wilinski, W (2012) Beginning of the end of cost competitiveness in CEE Countries—Analysis of dependence between labor costs and internationalization of the region Comparative Economic Research, 15(1), 43–59 World Bank (2015) Gross national income per capita 2014, Atlas method and PPP http://databank.worldbank.org/data/download/GNIPC.xls Accessed Mar 2016 Index A AB Mazeikiu Nafta, 115 accumulation, 128, 131, 143–5, 151–67, 247 acquis communautaire, 26 advantage competitive, 3, 5, 8, 9, 24, 156, 201, 243, 244 cost, 38, 243 locational, 6, 24, 27–9, 101, 244, 245, 248 ownership-specific, 115, 116 Aeromobil, 251 aid intensity, 202 Alstom, 37 automotive industry, 39, 61, 200, 201, 238 Avast, 251 B backward linkage, 6, 61 balance of payments, 2, 19, 54, 59 balance of trade, 54 Banking Union, 176 Bankscope, 179, 181n3, 182–4 beggar-thy-neighbour, 38 Brazil, 11, 53, 62, 65, 68, 70, 72, 155 BRICS countries, 53, 62–72 Bulgaria, 5, 17, 18, 25, 29–31, 55, 62, 106–8, 113, 115, 115n4, 117, 121, 160, 177, 179, 183, 219–38, 249 business environment, 17, 45, 51, 54, 68, 162, 189, 198, 230, 235, 236 business process outsourcing (BPO), 37 © The Author(s) 2017 B Szent-Iványi (ed.), Foreign Direct Investment in Central and Eastern Europe, DOI 10.1007/978-3-319-40496-7 259 260 Index C capital formation, 31, 52, 71, 91 capital intensity of production, 78, 79, 81, 92 capital intensive, 38, 91–2, 101, 133, 136, 245 capital-to-labour ratio, 79, 91, 92, 95 cash grant, 203, 205 investment incentive, financial, 96, 199, 200, 202 CDProjekt Red, 251 Central and Eastern Europe (CEE), 1, 18, 23, 62, 99, 128n2, 151–67, 221, 230, 235, 241 transition of, 3, 5, 9, 18, 19, 52, 99, 106, 108, 176, 241, 242 centre, 19, 28, 36, 37, 44, 55, 70, 132, 136, 140, 154, 159, 199, 200, 203, 243, 244 CEZ, 115 China, 11, 36, 53, 62, 63, 69, 70, 72, 155, 182, 243 Christian Dior, 37 compensation of employees (CoE), 6, 163–5, 166 competitiveness, 1, 5, 10, 17, 26, 34, 54, 59, 82, 84–94, 128, 133, 154, 156, 158–60, 162, 176, 210, 212, 219–38 convergence, 143n12, 176, 242, 245–7, 249, 250 core, 14, 15, 60, 135, 137, 137n9, 138, 140, 143, 144, 153–5, 155n2, 156–7, 159, 161, 162, 164–7, 182, 197 immanent or inner, 155 corporate network, 154, 157, 159, 167 Council for Mutual Economic Assistance (CMEA), credit default swaps (CDS), xi, 177 crisis, 4–6, 8–12, 15–17, 24, 29, 31, 34n6, 35, 37–40, 45, 52, 53, 56, 59, 61, 65, 68, 70, 71, 84, 86, 88, 90, 92, 117, 118, 120, 121, 127, 128n2, 156, 156n4, 160–2, 164–6, 171, 175–8, 183, 188, 189, 219–22, 224, 229, 236–8, 241–4, 248, 252 Croatia, 25, 31, 34, 41, 104, 108, 113, 115, 117, 118, 121, 160, 160n11, 163, 179, 183, 223n1, 227 crony capitalism, 7, 254 cross-border merger and acquisition (M&A), 19, 31, 173 current account, 1, 10, 51, 54, 58, 59, 72, 242 customs union, 26, 27 CzechInvest, 63, 65, 68–70, 200, 203n3, 208, 210–14 Czech Republic, 2, 5, 10–12, 17, 18, 29, 30n3, 31, 35–8, 51–66, 68–72, 84, 94, 103, 104, 106–8, 113–16, 121, 143n15, 160, 177, 183, 193, 200, 201, 203, 205, 206, 210, 222, 223n1, 235, 251 D decoupling (from crisis), 44 Department for Foreign Investments and Public-Private Partnerships, 227, 228 development tax allowance, 205 Index discretionality, 205 divestment, 63, 243 Doing Business Report, 236 E eclectic paradigm, 12, 24 OLI paradigm, 101, 173 economic nationalism, 40 efficiency seeking, 5, 29, 102, 128, 241 electronics industry, 141 employment, 5, 31, 142, 205, 230, 236, 242, 246 Energo Pro, 115 entrepreneurship, 131, 143–5, 252, 253 equity capital, 56, 71, 84, 182 Estonia, 29, 31, 44, 104, 106, 107, 113, 115, 118, 121, 155, 160, 161n11, 177, 179, 183, 223n1, 235 European Commission, 46, 158, 158n7, 179, 200n2, 201, 202, 214 European Union accession to, 17, 53, 222, 235 membership of, 158 periphery of, 14, 156, 157, 164 regulations on state aid, 253 exploitation, 165 export processing zones, 29 phasing out of, 29 exports, 1–3, 11, 26–8, 28n2, 29, 31, 51, 52, 59–3, 70–2, 78–82, 84, 92–5, 131, 135, 220, 235, 243, 245, 246, 248, 253 261 F Financial Service Action Plan, 176 financial services, 52, 57, 230 Flextronics, 36 flying geese model, 28n2, 115, 120 special, 115–16 foreign direct investment (FDI) concentration of, 99, 114 Contribution Index (UNCTAD), 30–2, 33 determinants of, 3, 15, 16, 52, 59, 174, 187, 196 development based on, 43, 101, 248 effects of, 4, 8, 9, 39, 53 efficiency-seeking, 5, 29, 241 global stock, 25 greenfield, 2, 34, 83, 101, 102, 105, 244 higher value added, 5, 7, 16, 28, 34, 37, 43, 45, 69, 70, 243, 244, 248, 253 indirect, 12, 116, 251 indirect outward, 12 inflows, 5, 10, 11, 17, 24–7, 34, 40, 44, 45, 52–6, 58, 60, 61, 63, 71, 72, 78, 82, 84, 85, 87, 156, 194, 196, 220–5, 229, 234, 238, 245 intra-CEE, 12, 100, 102, 104, 105, 108, 113, 114, 116, 120, 121 intra-regional, 99, 100, 103–5, 120 inward stock, 26, 27, 35 lumpiness of, 27 outward, 6, 12, 46, 53, 55, 56, 62, 65, 69, 100–2, 114–18, 251 262 Index foreign direct investment (FDI) (cont.) policies, 6, 9, 24, 38, 39, 220, 229–37, 242, 254 and regional integration, 99, 102 Regulatory Restrictiveness Index (OECD), 230, 234 statistics, 19, 106, 108, 113 structure, 85, 95 foreign exchange (FX) rates, 171, 177, 185 forward linkage, 61 fragmentation of production, 28, 28n2 G global financial and economic crisis of 2007, Great Recession, 4, 10, 23, 24, 34–7, 242, 243 Global Investment Promotion Benchmarking (GIPB) initiative, 197, 207n6, 227 global value chains, 3, 6, 7, 10, 13, 14, 18, 19, 28, 44, 60, 61, 71, 102, 127, 130, 242, 243, 246, 247, 250, 251, 254 gravity factors, 12, 52, 102, 115 Great Recession, 4, 10, 23, 24, 34–7, 242, 243 gross operating surplus and mixed income, 165 gross-value-added-to-output ratio, 11, 87, 88, 90, 95 H Honeywell, 37 host country, 10, 31, 72, 105, 106, 130, 132, 132n4, 144, 174, 195, 201, 212, 213 Hungarian Investment and Trade Agency (HITA), 199n1 Hungarian Investment Promotion Agency (HIPA), 199n1 Hungary, 2, 5, 7, 10–12, 13, 16, 18, 24, 29, 30n3, 31, 35, 36, 36n9, 37, 38, 40–2, 44, 55–7, 62, 78, 94, 103–8, 113, 115–18, 121, 127–45, 156, 159, 160n10, 161, 163, 177, 179, 183, 184, 184n4, 193, 201, 205, 206, 208, 211, 213, 221, 223n1, 243, 249, 251, 254 I iGO Navigation, 25 India, 53, 62, 70, 72 industrial policy, 7, 39, 251–4 intangible assets, 3, 7, 246, 246n1 international competition, 25 international division of labour, 23, 28, 38 InvestBulgaria Agency, 224, 227–9, 232, 238 investment climate, 39, 195, 227 Investment Climate Advisory Services, 227 Investment Development Path, 12, 100, 101, 121, 251 Index investment incentive financial, 201, 214 fiscal, 17, 229, 238 investment promotion agency, 196, 199n1, 225–7, 238 effectiveness of, 195–6, 201, 219 investment promotion policy, 83 Investment Reform Index, 227 ITD Hungary, 41, 208 J job creation subsidy, 38, 63, 195, 203, 205, 220 job losses, 39 K knowledge intensive, 38, 102, 131n3, 141 knowledge-led growth, 247 L Latvia, 31, 38, 107, 108, 113, 115, 117, 118, 155, 160, 160n11, 177, 179, 183, 223n1, 235 linkages, 6, 14, 39, 61, 79, 142, 144 Lithuania, 12, 31, 107, 108, 113–15, 117, 121, 160n11, 177, 179, 183, 223n1 M manufacturing, 3, 5, 34, 38, 41, 52, 57, 58, 60, 65, 69, 71, 72, 80, 81n1, 83, 85, 87–92, 129, 131, 136, 138, 140, 143, 144, 174, 263 178, 182, 199, 201, 203, 213, 224, 229, 241, 245 market seeking, 3, 10, 101, 175 middle income trap, 43, 242, 248–50, 251 Mikuláš Dzurinda, 82 MKB Bank, 115, 184n4 multinational banks, 15, 16, 171–89 multinational corporations headquarters, 6, 14, 132, 135, 136, 140, 251 subsidiaries, 5, 6, 8, 12–15, 84, 103–5, 129–3, 132n4, 134, 134n6, 135–7, 140–2, 144, 145, 189, 243, 244, 246n1 multiplicator effect, 39 N national capitalism, 40, 254 national champions, 7, 252 national treatment, 253 nation branding, 210 nearshoring, 28, 37 neoliberalism, 252 net outward investment position (NOIP), 116 Nokia, 36, 36n9 non-performing loans (NPL), 15, 172, 175, 177, 179, 181 O obsolescing bargain, 24, 24n1, 41, 42 offshoring, 37, 134, 140, 141 oligarch, 41 open economy, 28, 78, 92 ordinary least squares (OLS), 185 264 Index OTP Bank, 115, 184 outsourcing, 37, 140 Ownership, location, internalisation (OLI) paradigm, 101, 173 profit repatriation, 6, 51, 53, 54, 58, 60, 71, 248 protectionism, 40, 156 pseudo growth, 161, 164, 166 P Panama Papers, 7, periphery global, 155 integrated, 14, 155–7, 161, 166 Philips, 36 PKN Orlen, 115 Poland, 2, 11, 12, 18, 27, 29, 30n3, 31, 35–40, 42, 44, 55–7, 62, 78, 84, 94, 103, 104, 106–8, 113, 115, 116, 121, 156n4, 159, 160n10, 163, 177–9, 183, 184, 193, 200, 201, 203, 205, 206, 206n4, 221, 223n1, 232, 235, 237 Polish Information and Foreign Investment Agency (PAIiIZ), 200, 203n5, 205, 206, 208, 210–13 populism, 40 Portugal, Italy, Ireland, Greece, Spain (PIIGS), 155n3, 164–6 Prezi, 251 private sector (development of), 25, 31n4, 196, 198, 207n7, 209 privatisation, 2, 17, 31n5, 52–4, 82, 83, 85, 86, 105, 116, 157, 220–2, 229, 238, 254 privatisation-related acquisition, 105 productive capacities, 30 profit rate, 160 R reform, 8, 45, 51–72, 77, 82–4, 115, 221, 227, 230, 235–8 reinvested earnings, 5, 10, 56, 58, 61, 72, 88, 160, 241 relocation, 2, 36–8 re-nationalisation, 41, 42 research and development (R&D), 7, 28, 31, 63, 65, 82, 96, 128, 158n5, 200, 229, 238, 245, 250 Romania, 2, 5, 17, 18, 25, 30n3, 31, 31n4, 35, 37, 38, 55, 62, 106, 113, 160n11, 163, 177, 179, 183, 219–38, 249 Romanian Agency for Foreign Investment (ARIS), 227 Romanian Center for Trade and Investment Promotion, 227 Romanian Development Agency, 227 rule of the law, 40 Russia, 53, 62, 68, 70, 72, 105, 160n11, 182 S Samsung Electronics, 38 sector-specific taxes, 15, 172, 175, 182 sector targeting, 16, 194, 197–201, 213 Index semi-periphery global, 155, 156 integrated, 155, 155n2, 164 service sector, 5, 10, 57, 60, 71, 87, 88, 241 shared services centre (SSCs), 37, 199–201, 203 similarity index, 80, 114 skills development, 3, 6, 9, 28, 38, 45, 52, 65, 71, 230 Slovakia, 2, 5, 11, 12, 18, 24, 30, 41, 44, 55, 56, 77–96, 103–6, 108, 113–15, 118, 121, 155, 177, 179, 183, 193, 199, 203, 205, 206, 211, 223n1, 235, 249, 251 Slovak Investment and Trade Development Agency (SARIO), 199, 200, 203n3, 206, 208, 211–13 Slovenia, 31, 31n4, 103–6, 108, 113, 115–17, 120, 121, 155, 160, 160n10, 177, 179, 183, 220, 223n1, 237 small and medium enterprises (SMEs), 202, 206, 207 smile curve, 13, 127–45 social media, 197, 211, 212 Société Générale, 37–8 special economic zones (SEZs), 205, 206, 206n4 special purpose vehicles (entities), 35 spillovers channels of, 142 negative, productivity, 220 265 Staffino, 251 start-ups, 252–3 state aid, 200n2, 201–3, 205, 206, 229, 238, 253 state capitalism, 40, 44n12 state-owned enterprise, 1, 52, 220, 221, 229 structural break, 61, 72, 80, 84 supply chain, 60, 130, 143 T Tatra Tiger, 11, 77–96 Tavares, Rui, 40, 42 tax break, 2, 253 havens, 7, 8, 68 optimisation, 104 technology transfer, 1, 2, 7, 15, 52, 68, 70, 71, 102, 135, 158n5, 173, 199, 200, 203, 220, 244, 247, 252 3M, 37 TIER1 ratio, 182 too big to fail (TBTF), 15, 172–6 Total Capital Ratio (TCR), 182, 183, 186, 188, 189 training subsidy, 38, 135, 205–6, 244 transfer pricing, 7, 8, 14, 153 transformational crisis, 1–2 transhipment, 35 transition, 1–4, 9, 18, 19, 29, 30, 30n3, 31, 31n5, 34, 39, 45, 51–4, 59, 71, 83, 106, 108, 122, 176, 209, 241–2, 247, 248 266 Index U Unilever, 37 United Nations Conference on Trade and Development (UNCTAD), 19, 25, 26, 28, 30, 30n3, 35, 43, 44, 53, 55, 56, 58, 61, 62, 68, 78, 80, 81, 83, 85, 103, 117–19, 130, 131, 155n2, 156, 195–7, 201, 207, 207n6, 209, 213, 221, 225, 234, 245 unit labour cost (ULC), 162, 163, 165, 166 unskilled labour, 45, 101 upgrading export, 78, 79, 82, 94 FDI, 11, 18, 78–80, 87, 88, 91, 92, 94, 95 functional, 13, 129, 130, 131n3, 134–40, 142, 144 industrial, 28, 60 narrative, 243, 246, 251 process, 61, 131n3, 134, 136, 139 product, 245 V value added, 5–7, 9–11, 13, 16, 28, 29, 31, 34, 37, 43, 45, 53, 60, 61, 65, 69, 70, 72, 79, 80, 82, 87, 88, 90, 91, 95, 129, 130, 133, 138, 141, 144, 153, 162, 164, 166, 167, 201, 213, 226, 243, 244, 246, 248, 253 value capture, 6, 7, 13, 14, 18, 127–45, 242, 246–51, 253, 254 low value capture trap, 7, 250, 253, 254 vicious circle of poverty, 248 Videoton, 115 Visegrad 4, 83, 85, 95 Visegrad countries See Visegrad vocational training, 232 Vodafone, 37 W windfall tax, 41, 42 World Trade Organisation, 253 ... Hungarian Investment Promotion Agency Hungarian Investment and Trade Agency Information and communication technologies Investment development path Inward foreign direct investment Investment... Development, and Foreign Direct Investment The Central and Eastern European (CEE) countries embarked on their intertwined processes of democratic transition, economic transformation, and integration... Suggests Andrea Szalavetz 127 Inequalities of Accumulation: The Case of Central and Eastern Europe Annamaria Artner 151 Multinational Banks: Protective Factors of Financial Stability in Central and Eastern