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Proximity Matters? European Union Enlargement and Relocation of Activities

The Case of the Spanish Automotive Industry

University of the Basque Country

Vicente Camino-Beldarrain

University of the Basque Country

This article centers on the potential attractiveness of central and east European countries' (CEEC) economies for industrial groups given their comparative economic and institutional characteristics. The authors focus on the possibility that cars and components production may be relocated from plants currently operating in Spain to plants in new member states of the CEEC and that new investments under corporate internationalization strategies may go to those countries seeking to take advantage of the benefits inherent in setting up in states such as Slovenia, Slovakia, the Czech Republic, Hungary, and Poland. The authors look at the key variables for decision making and compare the theoretical probabilities with assessments drawn up by firms themselves concerning location factors on the basis of information gathered during field work.

Key Words: European Union enlargement • relocations of activities • compared operating costs • automotive industry • proximity requirements

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