The global economic crisis and foreign subsidiaries in new EU member countries

In the new members of the European Union (EU), the global crisis of 2007–2009 affected the subsidiaries of multinational enterprises (MNE) in a differentiated way. The overall effect was negative as subsidiaries suffered from declining international demand for their output. However, there were activities that benefitted from new cost-efficient opportunities offered in the new EU members, benefitting from subsidiary evolution. A major policy lesson learned was that investment promotion required measures targeting already established MNE subsidiaries, pushing them to upgrade to higher value-added activities, especially in terms of investment in knowledge and innovation, and support to their R&D function.