German Power and FDI in Central and Eastern Europe

Lavery, S. (2019) German Power and FDI in Central and Eastern Europe. SASE 30th Anniversary Conference Fathomless Futures: Algorithmic and Imagined, New York, USA, 27-29 Jun 2019.

Abstract

Germany’s large current account surpluses and its ability to shape European economic governance are widely taken as expressions of Germany’s economic and political power. These formulations miss an increasingly crucial dimension of German power in Europe: the question of ownership. Focussing on Foreign Direct Investment (FDI) within the Eurozone, this paper presents new empirical data which trace the development of German FDI since the formation of the euro in the early 2000s. It makes three central observations. First, after an initial period of restraint, German FDI flows significantly increased relative to other Eurozone states in the aftermath of the 2008 financial crisis. Second, by 2012, Germany had increased its outward FDI stock relative to other Eurozone states and its major Eurozone rival, France. Third, in the Central Eastern European (CEE) states, German FDI stock has consistently outstripped the FDI stock of other member states. These findings open-up a new lens through which to interrogate the question of German power within European capitalism. FDI of course can underpin economic development, technology transfer and rising employment. But high levels of foreign ownership can also have negative effects for dependent economies. The paper advances a number of proposals to combat these tendencies at the EU level, including establishing an ‘FDI imbalance procedure’, an FDI ‘rebalancing fund’, increasing sources of domestic credit within dependent market economies and developing a Pan-European industrial policy attentive to unequal patterns of foreign ownership.

• Item Type: Conference or Workshop Item
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Lavery, Dr Scott
• Authors: Lavery, S.
• College/School: College of Social Sciences > School of Social and Political Sciences > Economic and Social History

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