Contribution of Foreign Investment in Some Enlargement Countries: Structural Change, Collateral Effects on Local Manufacturing Sytems

In this work, we shall compare the results on two indicators of structural change (contribution to GDP and exports) between the companies with foreign capital and companies without foreign ownership. The article centres on the hypothesis that FDI has contributed positively to the structural change in six Enlargement Countries, but at the expense of having generated a segmented manufacturing system in which the sector linked to foreign capital clearly stands out as it provides more GDP and exports in manufacturing sectors of high and medium-high technology than the sector linked to domestic capital. The main cause for this seems to lie in the strategy implemented by the multinationals and in the way they integrate local companies into their global production and distribution networks. This paper was presented at the 18th International Conference of the International Trade and Finance Association, meeting at Universidade Nova de Lisboa, Lisbon, Portugal, on May 22, 2008.