‘Clouds’ in the Desert? Central and Eastern Europe and Ukraine in the New Division of Labour for Business Services and Software Development

Abstract

In the post-communist countries of Central and Eastern Europe (CEE) after 1990, foreign direct investment (FDI) was viewed as a key driver of the transition to a market-based economy and integration with the global and European economies. However, an extensive literature has critically addressed the assumption that foreign firms would bring much needed capital and have the propensity to transfer advanced technology and management techniques (Hardy 1998, 2006; Pavlinek and Smith 1998; Drahokoupil 2008; Fifekova, 2008a). Attention has now shifted to the increasing importance of offshoring in the service sector as a key driver of the globalisation process. Much has been written on the implications of relocating business services from the sender country perspective, in particular, focusing on job loss, welfare implications and efficiency gains. However, with the exception of India and Ireland, little consideration has been given to offshore destinations and even less to the impacts of this emerging trend in foreign investment in the new receiver countries of CEE from 2000 onwards.