Abstract
This chapter explores the possibilities CEE countries have for convergence with the development paths of the Western countries in a post-crisis setting. It argues that the current way in which the CEE countries have integrated into the global value chains of multinational corporations seems unlikely to provide strong further momentum for such convergence. Processes of “upgrading,” which many have perceived as the solution to longer term national development driven by FDI, are unlikely to meaningfully support convergence as these processes go hand-in-hand with decreasing shares of value capture by local affiliates. The CEE countries are stuck in a “low value capture trap” and require policies which foster the emergence of innovative, CEE-based global value chains in order to exit this trap.
I am highly grateful to Andrea Szalavetz for comments on earlier drafts. Any remaining errors however are mine.
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Notes
- 1.
As a counter-argument, multinational subsidiaries can be seen to develop together with the lead firm, with productivity growing in all firms due to the constant development of products, procedures and corporate structures, optimisation of the value chain and investments into tangible and intangible assets. This means that the total amount of value created along the chain will increase. Upgrading in this sense should thus not be seen as a zero-sum game (Szalavetz 2016).
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Szent-Iványi, B. (2017). Conclusions: Prospects for FDI-Led Development in a Post-crisis World. In: Szent-Iványi, B. (eds) Foreign Direct Investment in Central and Eastern Europe. Studies in Economic Transition. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-40496-7_11
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