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THE EFFECTS OF FOREIGN DIRECT INVESTMENTS ON EMPLOYMENT IN CENTRAL AND EASTERN EUROPE. FOCUS ON ROMANIA AND POLAND

Keywords: : foreign direct investments , employment , Central and Eastern Europe , Romania , Poland

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Abstract:

Central and Eastern Europe has become a player on the international market of foreign direct investment (FDI) with the fall of communism in 1990. Liberalization of markets has brought both advantages and disadvantages to new states in transition. Despite modest values of FDI received, the share of the region in total global FDI is increasing. Any type of investment, foreign or domestic one, is considered crucial as it generates employment and contributes to the economic growth .This paper tries to provide an analysis of the effects of FDI on the labor force of this region, and specifically in Romania and Poland. We analyzed the quantitative effect on the labor force, more precisely the effect on the employment. Foreign subsidiaries hold an important part of the occupied population, although the number of foreign firms is lower than the domestic ones. Despite the destruction of jobs in the early transition in the process of restructuring, foreign subsidiaries, both directly and indirectly create jobs and usually at a higher rate than the domestic companies manage to do. During the recent financial crisis, foreign subsidiaries proved to be more resilient and the cut off jobs was lower than in domestic firms.

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