"International Production and the Periphery of the European Union"

Pournarakis, Mike. (1999) "International Production and the Periphery of the European Union". In: UNSPECIFIED, Pittsburgh, PA. (Unpublished)

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Abstract

The dramatic rise in international production in recent years stands out as the most decisive factor in the globalization of economic activity. Foreign Direct Investment (FDI) has been growing very rapidly in the recent past while international trade ceased being the principle mechanism linking national economies. It is rather the interlinkages of trade and FDI that influence the economic growth and welfare of countries in a global environment that undergoes continuous change. In this trend, the European Union (EU), plays a protagonist's role. Since 1985 we have witnessed a shift in the European Community (EC) from trade-policy-led to production-based integration. The unification of the EC marker was accompanied by a massive FDI inflow while intra-EC investment exhibited a spectacular increase with an unprecedented level of merger and acquisition activity. The EC periphery does not seem to be in position to partake in these dramatic changes in the area of international production. The heavy concentration of transnational activity in the central core of the European Union is in the center of many concerns voiced by the periphery. This paper addresses the above problem. First, the paper attempts to assess the extent and nature of the problem. Secondly, it looks into possible explanations on a cause and effect basis. Finally, the question is raised whether corporate integration supports regional integration in the EU in the absence of a comprehensive FDI policy.

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