Radošević, S.; (2002) The electronics industry in central and eastern Europe: an emerging production location in the alignment of networks perspective. (Economics Working Papers 21). Centre for the Study of Economic and Social Change in Europe, SSEES, UCL: London, UK.

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Abstract

This paper analyses the emergence of central Europe as a new location for the production of electronics. The main factors that drive integration in the region into global production networks are also analysed, as well as prospects for upgrading the industry by using network alignment perspectives. Foreign investment is the primary vehicle of integration of CEE electronics firms into global production networks, and Hungary has moved furthest along this path, positioning itself as a major low-cost supply base in the region. Czech and Polish electronics industries are connected, in smaller, but increasing, degrees to international electronics production networks. Networks that are being built in CEE in electronics are usually confined to subsidiaries with still limited local subcontracting; they are export-oriented and are expanding. Local subsidiaries have mastered production capabilities and several subsidiaries in Hungary are European mandate suppliers in their respective lines of business. EU demand is the main pull factor, which gives cohesion to the actions of MNCs as well as to the action of local and national governments in CEE. The layer of local firms is still very weak with very limited capabilities in core technologies. This is the key weakness which prevents further alignment of networks in CEE electronics. Local governments play an important role in working jointly with foreign investors in establishing industrial parks and new capacities.

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