The economic and political opening of the Central and Eastern European Countries (CEECs) has had a tremendous
impact on the Austrian economy. In particular, trade and foreign direct investment (FDI) have increased
dramatically. Due to these changes a new discussion in `job-relocation` emerged. `Outsourcing investment` seems to
contrast to `market-driven investment`. Whilst it is assumed that outsourcing should have negative impacts on
domestic trade and employment, `market-driven`-investment should help to improve both. Theoretical as well as
empirical investigation of this controversy are the central topic of the thesis.
In the theoretical part of the thesis the main determinants of outward foreign direct investment are discussed and
eleven hypotheses are developed. Additionally, their specific implications on trade and employment by industries,
countries and over time are discussed in detail. Also this part provides several hypotheses which are tested in the
empirical part.
The empirical part of the thesis uses two data sets. One has been provided by the Austrian National Bank and
comprises a fully representative data set of Austrian total foreign direct investment in CEECs between 1989 and
1998. These data are analysed by host countries, industries, size of firms, kind of ownership, motives of investment,
kind of investment and several other indicators. Most hypotheses are confirmed. The second data set includes firm
data of an questionnaire which provides sales, trade and employment data of the parent firm as well as of the
affiliate for three different years (1989, 1995, 1998). Therefore this data set provides the unique opportunity to test
the development of both parent firm and affiliate simultaneously.
The results show that those firms which have invested in the CEECs indicate a much better trade and employment
performance than those firms which have not. Foreign direct investment and exports from the parent firms to
CEECs reveal a strong complementary relationship. However, a more detailed analysis reveals different results by
sectors. To conclude, although at the aggregate level the development is strongly in favour of domestic enterprises
there are several industries where this does not apply. Among others, this result asks for specific policy measures.