Foreign Direct Investment in Poland: Is Low Cost Labour Really the Sole Determinant

Abstract

Of late, much interest has been shown in the effects of Eastern European economic transition and its possible impact on international business. It has often been suggested that Eastern European economies such as Poland will have a major role to play in terms of low cost labour production for multinational firms. However, this is still far from being realised and equally important too, it is not clear that this would be the sole motivating factor for multinationals wishing to invest in Eastern Europe. This article attempts to establish the key determinants of foreign direct investment (FDI) activity in Poland by application of Dunning's theory of international production. This should help establish whether the common view of low cost labout being the sole determinant is justified.