Industrial Change and Foreign Direct Investment in the Postsocialist Economy

Abstract

This article examines the immense changes in Polish industry since 1990 and the impact of foreign direct investment. It is shown that, contrary to some general views about Central and East European transition, the postsocialist transformation processes have contributed to the enhanced competitiveness of Polish industry and to narrowing the gap between Poland and the European Union. The analysis includes basic indicators of economic performance, changes in branch structure, international relations (especially exports) and the labour market. Discussion of the role of transnational corporations is based on detailed empirical research which covered 2,020 foreign-owned factories. The regional differentiation of foreign investment is outlined, the disparities between developed and underdeveloped regions as well as metropolitan and non-metropolitan areas in particular. Special emphasis is put on principal factors affecting the location of new foreign factories. This is analysed within the broader context of phenomena underlying economic growth or decline in Polish regions and towns during the postsocialist era.