Chapter 16: Klaus E. Meyer and Camilla Jensen

Abstract

This chapter discusses the impact that Central and East European countries accession to the EU is likely to have on their FDI inflows. Based on a combination of theoretical arguments and empirical observations on German “Polish FDI, various developments for individual industries and investor types are proposed. EU membership is likely to have an immediate effect on the FDI inflows of new member countries that offer competitive locations and a high degree of legal and institutional alignment with the present EU countries. The short- term impact is likely to be largest in service industries and sensitive manufacturing industries such as food processing. Rationalized FDI in the wake of membership may in some cases favour CEE locations, in other cases not. In the long run membership is expected to prompt structural changes and boost economic growth, which will in turn drive FDI flows.