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This paper explores the impact of MNEs on innovation systems and the policy options available for peripheral economies to attract and embed the R&D activities of MNEs. After developing the conceptual and policy framework, the authors discuss the case of the new member states from Central and Eastern Europe that joined the EU between 2004 and 2007. They analyse the evolution of the R&D activity of MNE subsidiaries since the 1980s, contrasting the new member states with the core and Mediterranean countries of the EU.
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