LONDON — On the back of strong foreign investments, the electronics industry in the Central and Eastern European (CEE) region is flourishing and output rose by over 10 percent in 2005, with this year's growth expected to be even stronger. According to market research group RER (Oxford, England) , output in the region —, which takes in countries such as Poland, Hungary, Russia, Slovakia and the Czech Republik — is set to increase further by 8.1 percent and 8.5 percent in 2006 and 2007 respectively. That works out at a projected figure of $42 billion for 2007. The market researchers note this contrasts with a much more modest expansion for the Western European countries, which is put at 1.4 percent for 2005. The main difference in growth rates is down to the need to reduce labor costs and tap into emerging markets, say the REE researchers, who maintain CEE countries now account for approximately 13 percent of the total European electronics production. They also point to some significant geographical differences within the CEE region for growth to date and for future expansion. REE suggests just three CEE countries account for 73 percent of electronics output, and around 50 percent of the CEE market. Hungary is seen as the biggest player , with a 38 percent share in 2006, and this is said to exceed the combined figures for the Czech Republic and Poland combined (at 21 percent and 14 percent respectively). Russia accounts for just 7 percent of output. Both Original Equipment Manufacturers (OEM) and contract manufacturers have been quick to take advantage of the lower operating costs in these countries, and the researchers caution that both groups will be even more discriminating in the coming years about where they invest. They suggest greenfield investors will look to the lower cost CEE countries such as Bulgaria, Romania and Slovakia. The computing, communications and consumer markets accounted for 78 percent of total electronics output in the region in 2006. TV production was, and is set to remain one of the CEE electronics industry's big successes; an estimated 20.5 million sets were produced there in 2006.