This article draws on the global value-chain approach to investigate industrial upgrading in the automotive industry of four Central European (CE) countries: Czech Republic, Hungary, Poland and Slovakia. We review post-1990 production trends and the associated changes in the geography of automobile production in Central and Eastern Europe (CEE) based on inflows of foreign direct investment (FDI).To evaluate industrial upgrading, we examine the changes in the international trade of CE countries with automotive products classified in three value-added classes between 1996 and 2006, and we consider the increasing location of automotive design in CE by foreign investors.We classify CE automobile assembly plants into four types based upon the role of local design, local content, and their links with domestic economies. Based on the results of the analysis, we consider the effects of FDI and industrial upgrading on the role of CE in the European automotive production system.

★ European Urban and Regional Studies 10(2): 99-118

ABSTRACT. The aim of the paper is to outline demand-driven multiplier mechanisms, the theory behind them, and applicable quantifi cation methods (aggregate models and incremental methods). The authors discuss a number of key problems related to multiplier effects as fundamental mechanisms of local and regional development. The study of the magnitude, industry structure, spatial distribution, and key determinants of those effects can help understand growth mechanisms in local and regional economies and evaluate the advantages and disadvantages associated with new, e.g. foreign, investment. Furthermore, the results of earlier empirical studies of the magnitude, spatial distribution and determinants of multiplier effects are presented together with the outcomes of the authors' own study. KEYWORDS: multiplier effects, local and regional developmentBolesław Domański, Institute of Geography and Spatial Management, Jagiellonian University, ul. Gronostajowa 7, Poland, Multiplier effects are one of the fundamental mechanisms of local and regional development and occur when one type of economic activity affects another. Multiplier effects are driven primarily by market forces. An increase (or decrease) of one type of economic activity in a given city or region prompts an increase (or decrease) in demand for goods and services, which then triggers the development of other types of economic activity in the same region or city. An increase (or decrease) in income or employment in a local or regional economy triggered by the emergence of a new type of economic activity is called a multiplier effect. The multiplier is an attempt to quantify the power of a given economic trigger.The aim of the paper is to outline demand--driven multiplier mechanisms, the theory behind them, and applicable quantifi cation methods. The authors discuss a number of key problems associated with multiplier effects in the context of local and regional development. Furthermore, they show selected trends identifi ed empirically. Theory behind multiplier effectsMultiplier effects are part of several different theoretical approaches to urban and regional development, including the following:

The article addresses the embeddedness of automotive production in Poland in terms of supply networks. A comprehensive analysis of more than 550 suppliers, supported by company interviews, shows that foreign-owned producers become embedded in Poland in the automotive supplier networks they have largely created themselves. Numerous local suppliers gain access to export markets and become integrated in a Europe-wide production system. This trend has been accompanied by significant upgrading of foreign affiliates and domestic firms in terms of product quality, cost efficiency, adaptability, and fast response, but far less in nonproduction competences such as R&D. It is argued that the competences of automotive suppliers in Poland are built upon the localized capabilities, which are a product of the dynamic interplay between the activity of foreign firms and the changing local environment comprising various stakeholders. The localized capabilities constitute elements of a company's sunk costs and are embedding automotive producers in Poland. At the same time, the dependence on decisions and innovations from abroad and the limited development of local design and brands may constrain the future role of suppliers from the semiperipheral economy of Poland. Copyright (c) 2009 Copyright the Authors. Journal compilation (c) 2009 Wiley Periodicals, Inc..

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