Chapter Two focuses on the long-term effects of foreign direct investment at the subnational level in less developed peripheral regions. It identifies the different types and mechanisms of foreign direct investment in more developed (core) regions and less developed (peripheral) regions. It argues that positive long-term development effects of foreign direct investment in host regions depend on linkages between foreign-owned and domestic firms and spillovers from foreign-owned to domestic firms. It argues that in the long run, foreign direct investment tends to benefit core regions more than peripheral regions. Chapter Two also critically evaluates the most important conceptual approaches to foreign direct investment in peripheral regions developed in economic geography since the 1970s, namely the branch plant economy and truncation, new regionalism, new international division of labor and spatial divisions of labor, and the global production networks perspective.

Chapter Five investigates the core-semiperiphery-periphery structure of the European automotive industry between 2003 and 2017 by drawing on the global value chains and global production networks perspectives and on the conceptual explanation of the spatial division of labor in transnational production networks in the automotive industry. It develops a methodology to empirically determine the relative position of countries in the core, semiperiphery or periphery and changes in their position over time. The methodology is based on calculating the automotive industry power of individual countries, which is the combination of trade-based positional power, ownership and control power, and innovation power in the automotive industry. On the one hand, the empirical analysis revealed a dominant position of Germany as a higher-order core, which is joined only by France and Italy in the stable core of the European automotive industry. On the other hand, the periphery is mostly located in eastern Europe despite the rapid growth of the automotive industry since the 1990s. The majority of countries kept a stable relative position in the core-semiperiphery-periphery structure of the European automotive industry transnational production system during the 2003-2017 period.