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This paper investigates the effects of foreign direct investment (FDI) inflows in the catching-up level and global value chain (GVC) integration of new European member states (NMS), considering the manufacturing sector using data of different time spans within the 1990 – 2019 period. After analyzing the differences in FDI inflows in NMS, eight of them are chosen and focused in the study including Poland, Czechia, Hungary, Slovakia, Slovenia, Croatia, Bulgaria and Romania. Poland and Slovenia are discussed as case studies and evidences of GVC integration. The findings revealed that the inflows of FDI have limited impact and contribution to the improvement of the host economy’s manufacturing industry, economic development and GVC integration. Indeed, FDI mostly relates to product and process upgrading but not functional upgrading. Therefore, the development gap between the NMS and core European economies is not decreased over time. With regards to utilize FDI for economic upgrading, GVC integration, and catching-up, this research stresses the importance of host economies’ absorptive capability and government intervention through industrial policy.