This paper considers the mutually beneficial relationship of German and Austrian foreign direct investment (FDI) in Central and Eastern Europe (CEE) between 2004 and 2007, and the impact that the CEE states' belated membership in the Schengen Area had on further economic integration. It analyzes how excluding CEE member states from immediate membership in the Schengen Area upon their accession to the EU in 2004 and 2007 affected the economies of Germany, Austria, and the CEE member states. The paper argues that, in reviewing actual FDI and migration numbers following EU enlargements, fears over the potentially negative effects of labor migration from the New Member States (NMS-10) to the original “old EU-15” members were largely unwarranted. Rather, German and Austrian FDI in CEE created a mutually beneficial relationship between the regions, the potential for which was not fully realized until imposed barriers—like delayed Schengen membership—were finally removed.

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© 2014 Romy L. Franks

Creative Commons License

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This work is licensed under a Creative Commons Attribution 4.0 License.



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