The geography of multinational corporations in CEE countries: perspectives for second-tier city regions and European cohesion policy

Abstract

The largest regional disparities in CEE countries are between capital and non-capital city regions. MNCs invest in these regions for various reasons, contributing to regional development exogenously. In this paper we analyse location decisions of FDI investments in the period 2003-2010. We find that the most important location factors for FDI are market accessibility, strategic assets, institutional quality and agglomeration, in the post-crisis era even more than before. Presently, second-tier city regions are not capable of offering all these factors simultaneously. For improving their opportunities and contribution to European cohesion and convergence, more substantial and direct investments are needed. Without these, the recently suggested competitiveness opportunities of second-tier city regions are difficult to obtain.