chapter  17
The impact of multinational investment in Central and Eastern Europe
Pages 24

Foreign capital flowing into the economy of a country in the form of foreign direct investment (FDI) leads to a number of changes, both economic and social. By building new production facilities or taking over the existing ones, foreign companies affect domestic and foreign firms, the economy as a whole as well as its segments, sectors, branches and particular markets. This impact can be both positive and negative. The positive consequences of foreign investors’ influence include the transfer of modern production technologies, management methods and techniques; the introduction of new products and services, and higher quality and environmental standards; the creation of new jobs, the improvement of workforce qualifications; and better balance of payments. On the other hand, there are such negative effects of foreign investors’ involvement as the risk of increased unemployment (due to the elimination of unprofitable domestic competitors from the market or restructuring of acquired companies), worsening trade balance (due to excessive import) or the inflow of so-called ‘dirty technologies’.