Social Aspects of International Business in Central and Eastern Europe within the European Integration Process

Abstract

The aim of this paper is to assess the activities of international business from the point of view of its effects on the labour markets of those accession countries which are undergoing systemic transformation. This analysis covers two spheres, i.e. foreign trade and the activities of transnational corporations in the Central and Eastern European Countries (CEECs) in light of their accession to the European Union.

Many of the countries undergoing economic transformation from centrally-planned to free-market economies experienced high trade deficits in the initial period of ownership transformation, in part owing to the predominance of import in the economic activities associated with foreign investment, which in turn exercised a negative effect on their labour markets. Subsequently the trade deficit was incrementally reduced as the share of firms with foreign capital in overall export began to increase and the overall national economies increased their capacities to bring in and handle foreign investment. This increase in exports and reduced trade balance had the effect of creating new jobs.

From the point of view of the host country, employment issues are among the most important aspects in reviewing the activities of transnational corporations. Countries undergoing systemic transformation and structural changes expect the activities of transnational corporations to result in increased jobs and improvement in their labour market situations. Nevertheless the experiences of various countries suggest that transnational corporations engaging in foreign investment create new jobs in host countries in a selective and „economical” manner.