Nina Bandelj From Communists to Foreign Capitalists: The Social Foundations of Foreign Direct Investment in Postsocialist Europe. Princeton and Oxford, Princeton University Press, 2008. Socio-Economic Review, Vol. 7, No. 2, pp. 353–367.

Nina Bandelj’s exemplary study weaves many of the key propositions of economic sociology into an account of one of the largest and most important instances of market formation in recent history. Bandelj examines the social conditions and determinants of variations in foreign direct investment (FDI) in 11 countries of Central and Eastern Europe, all influenced by the rapid transition from socialist economic institutions in the 1990s. As globalization scholars have shown, FDI flows increased rapidly almost everywhere in the late twentieth century. But FDI inflows in postsocialist countries significantly exceeded global rates from 1995, with the FDI share of gross domestic product (GDP) in Central and Eastern Europe almost twice the global average by 2004. SER readers will not be surprised to learn that this was not due to the simple ‘liberation’ of markets from unnatural state fetters. What makes this book a model work of economic sociology is the theoretical and empirical range and subtlety with which Bandelj shows exactly how FDI markets were socially constructed.

This social constructionist account of FDI flows is ambitious in several ways. First, macro-economic processes captured in national accounts often seem more remote from the influence of network structure, political interests and cultural discourses than the economic action of firms and industries, and Bandelj’s cases and her analyses put social and historical flesh on the bones of macro-economic abstractions, providing an accessible approach to macro-level embeddedness arguments for students and scholars new to the field. Second, and in doing so, she does not limit her analysis to cross-national comparisons, but pursues her case against economistic explanation to the firm level and further, developing a model of investor and host firms as ‘practical’ rather than ‘rational’ economic actors. Her examination of the social construction of FDI across different levels of analysis is one of …

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