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The second criticism involves the substitution effect that shows
that investing in one zone comes at the expense of the liquidation of
another site. This argument is mitigated by the observation that similar
labor costs actually prevailed throughout formerly communist Europe,
whereas the countries with the lowest costs also tend to be unstable,
such as Ukraine. A final criticism refers to the enclave effect, i.e., a
lack of inter-firm cooperation and partnerships that leaves the pursuit of
subsidies as the lone motivation for certain investments. Although this
criticism may have applied during earlier phases, when zones were
primarily focused on assembly plants, it no longer pertained once a
larger proportion of complex products demanded new technologies, more
skilled workers, new production plants, and greater purchasing power.
The fact that clusters also emerged during this second phase, between
2006 and 2008 in Poland, offers clear evidence of durable inter-firm
interaction in the zones and of the positive effects of foreign
investments on the surrounding areas. This was true of the situation in
Silesia after development was coordinated with the neighboring regions
of Moravia, Györ in Hungary, and Bratislava in Slovakia, particularly
involving the automobile industry. Supported by transportation
19
infrastructure that links these zones to Germany and Austria, these
three neighboring regions formed a kind of trans-regional super-cluster,
the productive core of a new Central Europe.

II. The Cambodian Zones

The current situation is Cambodia is a direct outgrowth of thirty
years of political turmoil. After suffering through what was called the
“Indochina” war in the 1970s, the country was devastated from 1976
20
until early 1979 by the genocidal policies of the Khmer Rouge, which

19 Pavlinek P., Domanski B., Guzik, R., 2009, “Industrial Upgrading Through
Foreign Direct Investment in Central European Automotive Manufacturing”, European
Urban and Regional Studies, 16(1), p. 43-62
20 David Chandler, 1983, A History of Cambodia, Chiang Mai, Silskworm Books,
2008, 4 édition.
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