Introduction: The Scope of the Review

Abstract

This review of the existing literature on the effects of FDI on the economies of CEE employs a microeconomic perspective on technology transfer via foreign subsidiaries in transition countries. It thus does not include the nexus between FDI, technology transfer and economic growth — i.e. the link between FDI inflows and economic growth at the aggregate level. The reason for this decision is based on the fact that economic growth analysis of post-communist economies is extremely difficult. First, only a short period of time is available for analysis, which is unfavourable in growth accounting econometric studies. Second, current research in this area shows an overwhelming consensus that traditional factor inputs, including investment, have no role in explaining growth (Havrylyshyn, 2001).