Finland BORSOS, 1995; for Germany VINCENTZ, 1995). Even MEYER (1995) has tested the
proximity patterns of Western FDI in Eastern Europe on survey evidence and found significant effects in
favour of this factor. He also emphasises Austria’s special role due to its geographic position and existing
trade relations during the Cold War years.
VINCENTZ’s (1995, 107 pp.) review on the German literature concluded that with the exception of one
study all others report that market related factors are much more important than cheap production costs.
However, he mentions that for more recent investments and in particular for prospective investments low
labour-cost motives are of increasing importance. This observation is in accordance with the conjecture
of a survey of investors which was conducted in January 1995 (LANKES and VENABLES, 1997). One
of the main presumptions of this study is that the share of cost-motivated, export-oriented investments
into the transition countries will increase over time, while market-oriented and natural resource
investment will recede. Their argument is that for market-oriented investment the FMA was important
and for natural resource investment it was in particular the opportunity to acquire strategic assets at a low
cost. Hence both kinds of investment have been realised even if the country risk perceptions among
investors have been high. If the transition process proceeds and risk recedes more investors will move in
for whom cost competitiveness is a particular concern. However, this was only a conjecture. Meanwhile
there is increasing evidence that in some industries (!) investor motivations are no longer based
exclusively on market access (LORENTZEN, et. al., 1998).
A rather recent study presents the results from a survey of major Western investors in Central Europe
(PYE, 1997). This study is of particular interest because it uses a methodological approach which is very
similar to our own. Hence, more or less accidentally, many of these results can be directly compared with
our findings. However, even this study neither provides a sectoral breakdown nor any joint analysis of
motives and trade patterns.
Concerning the motives of FDI this survey provides the following results: Market factors that are
oriented towards the local host country environment (to access/supply the local market, growth potential,
and to develop the local market) are the primary force for FDI. Interestingly, the opportunity to establish
local firms as a base for exports proved to be an insignificant motivational factor (PYE, 1997, 28 pp.).
Although the factor ‘comparative labour cost advantages’ scored rather high Pye argues that this should
be examined in conjunction with the finding that the ‘availability of a skilled workforce’ was viewed as
important. Finally, the strategic factor ‘to gain FMAs’ was viewed as (very) important.
The section on export activities4 of the affiliates presents a surprising result. On average, 41% of all
affiliates indicated that they were not involved in any export activity and another 22% showed export
activities only between 1% - 10%! Hence the majority of affiliates show astonishing low export
activities. Another interesting result of this study is that most export activity was directed at serving the
markets of the CEECs and/or the FSU (PYE, 1997, 52). Although these results seem to be astonishing we
have to keep in mind that this survey data comprises all industries. Only 57% of the enterprises belong to
manufacturing, 12% to wholesale and retail trade and another 10% to finance and insurance. Hence this
sample represents a fairly diverse section of economic fields of activities. In particular in this respect
Pye’s study differs quiet a lot to most other studies. Such studies on export activities of the affiliates (see
HUNYA, 1997; BORSOS, 1995; LEMOINE, 1997; KURZ and WITTKE, 1997) nearly all conclude that
they provide a positive contribution to exports. However, most of this research is restricted to the