This project will analyze the recent patterns of industrial restructuring in the new EU member and in selected NIS in order to reveal the role played by the varying degree of economic integration in the progress of economic transition and restructuring, a ctivities of foreign investors (especially regarding technology transfer, innovation activities, management practices and resulting changes in production and trade specialization). It will also explore the potential for a closer economic cooperation betw een the enlarged EU and its new neighbors in the NIS, prospects for a closer economic integration in the NIS, and contribute to the relevant policy discussions. The topics to be analyzed include patterns of industrial restructuring in ACs and NIS, EU-NIS trade specialization (including country- and industry-specific studies), challenges of EU enlargement and WTO accession for the NIS, prospects for EU integration and the regional integration in the NIS, the role of inward and outward FDI in both ACs an d NIS, emerging industrial clusters in the Baltic Sea region, innovation policies and innovation activities at the company level. The participation of researchers from the EU and the NIS takes advantage of the existing know-how on economic transition an d integration from the countries on EU-NIS borders. Dissemination of the research results to both scientific community, policy makers and a broader public will not only raise awareness regarding the importance of trade and FDI for restructuring and integ ration in the NIS, but also help to avoid possible pitfalls of poorly prepared or wrongly implemented policies. Policy recommendations regarding restructuring strategies in the NIS will be elaborated and challenges of a deeper integration between the enl arged EU and its new NIS neighbors will be explored and, together with selected topical project research and policy papers, published.