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Central European countries still highly dependent on foreign companies

Budapest, Hungary – New statistics highlighting the stranglehold of foreign companies in Central European countries might add grist to the mill of nationalist leaders slamming the “economic colonization” of Western countries.

According to Eurostat data, 1.2% of companies in the EU were foreign-controlled. On average, the foreign-owned businesses in EU member states accounted for 15.3% of employment and 25% of the (non-financial) economy’s added-value, a rise of more than 2 percentage points compared to 2010.

Foreign-controlled enterprises

The countries where foreign-owned companies brought the lowest share of added-value were Cyprus (13.4%), Italy (15.8%), Greece (16.3%), France (16.4%) and Denmark (21.5%).

Central and Eastern Europe still highly dependent on foreign companies

At the other end of the scope, most of the countries with the highest shares of added-value stemming from the activity of foreign-owned companies were concentrated in Central and Eastern Europe.

The only country where foreign businesses account for more than half (51.4%) of the economy’s added-value, Hungary comes first, followed by neighboring Slovakia (48.1%), and Luxembourg completing the podium. The Czech Republic (43.3%) and Poland (36.8%) came fifth and eighth respectively, well above the EU average.

But in terms of volume, foreign-owned companies only represent a fraction of the total number of businesses in Central Europe: apart from Poland, where they account for nearly 10%, Hungary (less than 3%), Czechia (1.2%) and Slovakia (less than 1%) have a relatively small share of companies owned or controlled by foreign entities.

A controversial political issue

The disproportionate importance of foreign companies, mostly from Western European countries like Germany, France or Italy, on Central European economies is a long-recurring issue and thorn in the side of bilateral relations between Europe’s East and West.

Visegrad Group leaders, including Hungary’s Viktor Orban and Poland’s ruling Law and Justice party, have long accused Western European companies of taking advantage, exploiting and unlawfully dominating their local markets to the detriment of home-grown businesses, following what’s often described as the “invasion” of foreign multinationals and investors when Central European countries, still lacking maturity after forty years behind the Iron Curtain, transitioned into open-market and liberal economies in the 1990’s and early 2000’s.

The “re-nationalization” of those countries’ economic and industrial fabric has been used as a rallying cry by Central European leaders wishing to regain control over their place and role in the European value chain, with critics accusing them of politicizing the issue to strengthen their nationalistic voter base.

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