foreign direct investment in slovakia theoretical reflections on a changing investment incentive...

Foreign Direct Investment in Slovakia

Theoretical Reflections on a Changing Investment Incentive Structure

Kytir SandraDepartment of SociologyLancaster UniversityUK

Tendencies in the Slovak Incentive Structure

(1) Broadening of the notion of investment incentives

(2) From an incentive structure to a steering structure

Brief Overview of Slovakia‘s Relationship to FDI

Shift from Economic Nationalism to Economic Liberalism

Changes in the relationship between political and economic autonomy

FDI is recognised as a policy field Subordination of economic policy to

international competitiveness

Tendencies in the Slovak Incentive Structure

(1) Broadening of the notion of investment incentives

(2) Impact of foreign direct investment on the restructuring of regional economies

Redrawing of boundaries between investment incentives and other economic policies

The notion of investment incentives has broadened to include, for example, what was formerly subsumed under regional or infrastructural development

Reasons: necessary diversification of competitive strategies, external and internal constraints, financial aspects (e.g. cost-efficiency)

Consequence: increasing influence of foreign investors on regional development coinciding with increasing efforts to embed FDI in regional economies

Tendencies in the Slovak Incentive Structure(1) Extent to which regional policy is being

shaped by regions’ approach towards foreign direct investment

(2) From an incentive structure to a steering structure

Initially, state aid was an incentive or ‘bonus’ to convince foreign companies to invest

More recently, eligibility criteria for investment incentives have been linked to regional and economic development objectives (e.g., the amount of state aid is tied to a wide range of criteria and conditions)

Consequence: tendential shift from FDI as developmental strategy to FDI as part of a developmental strategy

Concluding Remarks

These two tendencies are inter-related Competitive strategies are by no means

coherent and consistent over time; rather, they have an evolutionary trajectory, going through various stages