Expansion by Foreign Direct Investment in European Countries - Dissertation Example

The establishing of the transition state and their re-entry into the international market saw a phenomenal drive for privatization which necessarily required capital investments together with business and management assistance each of which are specifically FDI oriented.  Moreover, these transition states not only provide a stable supply of low labor costs they are both geographically and politically close to Western Europe.  Certainly, these factors ought to be appealing to FDIs.  Even so, the international expansion of Europe by FDIs has not developed as expected.

  With the expectation that a number of Central and Eastern Europe (CEE) countries will eventually become members of the European Union, several questions relative to the impacts of international expansion in Europe arise.  The first question is whether or not this prospect will contribute to European internationalization via FDI.  This paper investigates this question since Europe represents a unique conglomeration of developed and developing countries, an essential feature of the internationalization.

  The main objective is to ensure that developing countries share in international capital flows.  Another relevant question for investigation is whether or not FDIs will introduce the skill and capital necessary for modernizing CEEs in Europe or will it encourage monopolies and rent-seeking practices.  If the FDI can be beneficial in terms of internationalization in Europe, what factors are essentially fueling its development and growth and what can European countries do to make the FDI more appealing?

Ideally, the impact of internationalization by FDI in Europe should be the supply of cheap labor with a reciprocal infusion of capital for the funding of privatization and industrialization.  In this regard, Western European and other foreign companies would assist in the transitioning of these socialist states to open-market economies by not only providing investment capital, but by virtue of technology and management transfers.  This is the intended consequence of economic integration under the auspices of internationalization.

  More importantly, this is the way forward if Europe intends to achieve its goal of becoming a global economy.