Abstract. The structural transformation of industry in CEE and SEE countries is influenced by several internal and external factors, both general and specific. Problems of production sector rationalization are caused by many reasons, in particular, by the mismatch of demand and supply of long-term capital, the lack of skilled labor and the dissimilarities in the technological level. The institutional harmonization in the frames of integration process and FDI attraction have contributed to formation of diversified and externally oriented production complexes that have significant impact on the industrial macro-, meso- and microstructure. The dependence on foreign economic conjuncture carries certain risks, especially if domestic and foreign enterprises are characterized by disparity in the level of productivity. The leading recipients of FDI eventually become the intermediate tier of production externalization. This fact underlines the necessity of incorporation of local companies in the TNCs’ value chains in order to limit the pace of relocation. The high level of external openness contributes to technological modernization and increases the competitiveness of knowledge-intensive industries. However, in the region under review the national R&D is almost not commercialized, so closer cooperation between the industrial companies using local research and educational potential is needed. Among territorial disparities in industrial development one can mention the predominant role of capital cities and resistant backwardness of periphery areas losing its economic competitiveness. The production shift to economic centers with the best combination of production factors is accompanied by the increase of agglomeration effect of the new growth poles, mainly represented by industrial parks and free trade zones. Entrepreneurial activity in the border regions of the most economically developed countries triggers the further progress of integration processes, in particular, the formation of the first trans-border industrial clusters and complexes.