Foreign direct investment and trade in transition countries: Tracing links

Several studies have emphasized the links between trade reorientation and industrial restructuring in transition countries. In these studies trade has usually been considered as transactions among unrelated enterprises in different countries. However, an important and steadily growing share of trade are transactions with multinational enterprises and their foreign affiliates. Foreign direct investment of multinationals is the missing link in explaining this type of trade. The paper deals with the so-called intra-firm trade of multinationals operating in transition countries. It argues that trade within the internal networks of multinationals is the major route for international technology'transfer. It summarizes shortly previous studies and takes a glance at the trade structure of Hungarian enterprises involved in a joint venture. Finally, it discusses the implications for corporate restructuring in transition countries.