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.
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