Foreign Direct Investment and Regional Attractiveness in Southeastern European countries (original) (raw)
Foreign Direct Investment in Southeastern Europe
2005
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Gravity factors explain a large part of Foreign Direct Investment (FDI) inflows in Southeastern Europe-a region not comprehensively covered before in econometric studies-but host-country policies also matter. Key are policies that affect relative unit labor costs, the corporate tax burden, infrastructure, and the trade regime. This paper develops the concept of potential FDI for each country, and uses its deviation from actual levels to estimate what policies can realistically be expected to achieve in terms of additional FDI. It also finds evidence that above a certain threshold, the importance of some policies for attracting FDI is distinctly different.
Foreign Direct Investment in Southeastern Europe: How (And How Much) Can Policies Help?
IMF working paper, 2005
This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Gravity factors explain a large part of Foreign Direct Investment (FDI) inflows in Southeastern Europe-a region not comprehensively covered before in econometric studies-but host-country policies also matter. Key are policies that affect relative unit labor costs, the corporate tax burden, infrastructure, and the trade regime. This paper develops the concept of potential FDI for each country, and uses its deviation from actual levels to estimate what policies can realistically be expected to achieve in terms of additional FDI. It also finds evidence that above a certain threshold, the importance of some policies for attracting FDI is distinctly different.
Main Determinants of Foreign Direct Investment in the Southeast European Countries
Transition Studies Review, 2006
The growth of foreign direct investments (FDI) in the world has been significant in recent years. Between 1990 and 2000 worldwide FDI inflows increased more than five times, and since 2000 they have declined. During the period of FDI expansion, growth was especially strong from 1997 onward. However, most of the FDI transactions were between the developed countries. The distribution of FDI is unequal and less-developing countries face difficulties in attracting FDI. Despite the fact that FDI is increasingly important to developing countries, over the past few years the share of the developing countries in worldwide FDI inflows has been declining. The paper analyses geographical and sector distribution of FDI in the Southeast European countries (SEEC) and compares its amount with that in Central East European countries. According to economic theory, FDI towards developing countries flows for labor-intensive and low-technology production, while towards developed states, it flows for high-technology production. Identification of determining factors of FDI is a complex problem which depends on several characteristics specific for each country, sectors, and companies. All those factors could be grouped in three broad categories: economic policy of host country, economic performance, and attractiveness of national economy. On the desegregated level, FDI depends on size and growth potential of a national economy, natural resources endowments and quality of workforce, openness to international trade and access to international markets, and quality of physical, financial, and technological infrastructure. An important question is how SEEC can attract more foreign investment. To find the answer, this paper uses data on FDI inflows to SEEC to determine the main host country determinants of FDI and provides regression-based estimation of determinants of FDI. Using a sample of SEEC and panel data techniques, the determinants of FDI in this part of Europe are investigated. The paper researches the relationship between FDI, GDP, GDP per capita, number of inhabitants, trade openness, inflation, external debt, and information and communication technology sectors. For SEEC, FDI inflows are largely dependent on the completion of the privatization process and in this paper we include the level of private sector and privatization as explanatory variables. Our findings suggest that certain variables such as privatization and trade regime, as well as the density of infrastructure, appear to be robust under different Transition Studies Review (2006) 13 : 359-377
TEME, 2019
Foreign direct investment has a significant role in Southeastern European countries. The aim of the paper is reflected in assessing the character and nature of the relationship between macroeconomic factors and foreign direct investment in Southeastern European countries. Further, the subject of paper includes the examination of the impact of selected macroeconomic variables on foreign direct investment in six countries for the period from 2000 to 2012. The selected countries are Albania, Bosnia and Herzegovina, Bulgaria, Macedonia, Romania and Serbia. The research includes an examination impact of market size, national competitiveness and employment on foreign direct investment. By using the Hausman test, it was confirmed that the fixed effect model is an appropriate model in panel analysis. Based on the result, it determined the positive impact of market size, while the industry's share of GDP and employment have a negative impact on this variable. Also, the results confirmed ...
DESCRIPTION The paper studies the interdependence of the economy size and foreign direct investments (FDI) in the transitional economies of Central, Southeastern and Eastern Europe. In the global capitalist economy, foreign direct investments (FDI) represent one of the key determinants of economic growth. Among some transitional economies, in the last 20 years, FDI represented one of factors that increased the economic growth, and in other transitional economies, the influence of FDI was minor or even negligible. In the literature devoted to the influence of FDI on economies, the research about the determinants of geographical pattern of FDI distribution usually focuses on the factors that determine why some states manage to draw FDI in higher levels than some other states. Our research focused on the transitional economies of Central, Southeastern and Eastern Europe, which were for the most part of the last 20 years net receivers of the FDI. Only a couple of these countries in the ...
Empirical Analysis of Foreign Direct Investments at NUTS 2 Region, in European Union and Romania
Procedia Economics and Finance, 2015
Foreign Direct Investment (FDI) plays an important role in the development of national and regional economies and it has been considered a force for European Union integration, especially for developing regions. More, the FDI represent a key-tool for sustain development and economic growth at regional/local level. Foreign firms bring new technologies, knowledge and management skills, and local firms can learn from this. Therefore, the presence of foreign firms can improve region's competitiveness, but fears can also be raised that foreign competitors crowd out local firms, and a net positive effect on the regional economy cannot be taken for granted. The understanding FDI determinants for development regions represent a field of interest both policy makers and investors because they are a particularly driven to market globalization. This study provides an empirical analysis of FDI at regional level (NUTS 2 regions) in European Union and Romania.
Foreign Direct Investment in the Southern and the New Acceding European Countries
2009
In this paper, after a general overview of the economic situation of the new EU countries of 2004, we start by studying the foreign direct investment (FDI) by economic sector in the three Baltic countries (Estonia, Latvia and Lithuania), the five Central countries (Czech Rep., Poland, Hungary, Slovakia and Slovenia), besides Cyprus and Malta. In second place, we will monitor the potential and performance FDI indices for acceding countries and for Spain, Portugal and Greece. Finally, we present some conclusions.
Journal of Economic and Social Development (Varaždin), 2016
The paper studies the interdependence of the economy size and foreign direct investments (FDI) in the transitional economies of Central, Southeastern and Eastern Europe. In the global capitalist economy, foreign direct investments (FDI) represent one of the key determinants of economic growth. Among some transitional economies, in the last 20 years, FDI represented one of factors that increased the economic growth, and in other transitional economies, the influence of FDI was minor or even negligible. In the literature devoted to the influence of FDI on economies, the research about the determinants of geographical pattern of FDI distribution usually focuses on the factors that determine why some states manage to draw FDI in higher levels than some other states. Our research focused on the transitional economies of Central, Southeastern and Eastern Europe, which were for the most part of the last 20 years net receivers of the FDI. Only a couple of these countries in the years of the...
Foreign Direct Investment in Southeast Europe
2003
This paper applies a gravity model to foreign direct investment (FDI) stocks in five countries of Southeast Europe from nine selected Western European source countries, using five countries of Central Europe as a control group. Basic elements of the economic theory on FDI are shortly reviewed, then the discussion shifts to recent empirical work and the various issues surrounding estimates using the gravity equation.
usc.es
In this paper, after a general overview of the economic situation of the new EU countries of 2004, we start by studying the foreign direct investment (FDI) by economic sector in the three Baltic countries (Estonia, Latvia and Lithuania), the five Central countries (Czech Rep., Poland, Hungary, Slovakia and Slovenia), besides Cyprus and Malta. In second place, we will monitor the potential and performance FDI indices for acceding countries and for Spain, Portugal and Greece. Finally, we present some conclusions.
ANNALS OF THE ORADEA UNIVERSITY. Fascicle of Management and Technological Engineering., 2011
With the implementation of global and regional strategies by MNCs, the choice of location is becoming increasingly important, hence requiring a better understanding of the internationalization process and of the factors influencing the spatial distribution of FDI. The main objective of the study is the analysis of the regional disparities in Romania based on the essentials indicators which influence the foreign direct investment at regional level.
Foreign Investments in the Economy of Eastern European Countries
2021
Foreign direct investment (FDI) has been debated by many specialists being considered in most cases a source of development for the receiving countries. From this perspective the study is a comparative analysis of FDI evolution in Eastern European countries and an analysis of FDI in Romania. The analysis was carried out over a period of five years and allowed us to obtain useful information regarding the FDI volume expressed in % of GDP, FDI structure and structure of activities in Romania considered attractive for FDI, respectively FDI distribution in the regions of Romania.
Regional integration, foreign direct investment, and regional development
EIB Papers, 2004
Zusammenfassung: Stressing that the liberalisation of international trade and investment may lead to a geographical concentration of economic activity, this paper discusses the scope for FDI as an instrument of regional policy aimed at offsetting the centripetal forces unleashed by liberalisation. Focusing on Sweden, the paper finds no signs that FDI has contributed to reducing income and development gaps in this country. More specifically, remote provinces that qualify for EU regional support-including support for FDI-have not ...
2015
This paper accounts for the main determinants of Foreign Direct Investment flows to 5-SEEC and the 10-New Member States of the EU countries by using an augmented Gravity Model. The study takes into account country specific institutional factors that determine foreign investors’ decisions from 14 core European Union countries to invest into SEE-5 and EU-NMS-10 countries. From the results of the study we find that gravity factors and institutional related determinants like control of corruption, political stability, bilateral FDI agreement, WTO membership and transition progress appear to significantly determine inward FDI flows from core EU countries to host economies of South East European region and new European Union member states.
1996
First, the statistical evidence on FDI in the Central and Eastern European countries is shown. The volume of investment, the trends of capital inflow according to countries of destination and origin, and the distribution among industries are discussed. The main observations are the following : the volume of investment remained below the expected amount, Hungary attracted almost half of the investment over the whole period, whereas the Czech Republic got only the early investment. The foreign capital inflow seems to be diverted in time from the (North)-West part earlier towards the SouthEastern part of the region more recently. As far as the pattern of countries of origin is concerned, Germany is leading, followed by the US and Austria. The Far East is almost absent. As far as the industry pattern is concerned it is a far cry from the typical picture of industries which are characterised by early and a large amount of FDI. Some descriptive analysis was done on a pioneer sample of the 400 major international investors in the Visegrad-3 countries (the Czech Republic, Hungary and Poland). Investor country, industry and company determinants of foreign direct investment are dealt with. There seems to be an advantage of being near to the market, in particular for German and Austrian small to medium-sized companies. There is some interesting evidence about the role of intangible assets such as advertising and R&D, as most of the investment projects seem to be characterised by a low use of these intangible assets, but this seems to be compensated by the major investment deals which take place in industries which loyally advertise and do research. The size effect is not clear, but the sample of investors was biased towards larger projects. This puts forward some further hypotheses to investigate on whether the presence in the East is explained by market or low cost considerations and seen in a long term rather than in a short term perspective. Finally, this paper provides an overview of the theories on foreign direct investment behaviour by multinational companies. The different strands of this literature originating in international business, industrial organisation, location theory and the theory of the firm models are briefly mentioned. The emphasis is on the more recent analytical models of strategic behaviour, and, given the idiosyncrasies of the situation in Central and Eastern Europe as countries of destination of the foreign capital inflow, four major game theoretic related ways of analysis are expounded upon and criticised in the way they are inadequate to analyse FDI in the CEECs. These frameworks are: entry deterrence, waiting under uncertainty and learning from it, strategic trade policy and delocalisation. From this a tentative integration is suggested. • This work is part of the Ph.D. thesis of the author, which is financially supported by the N.F.W.O. (Belgian National Fund of Scientific Research). We would above all like to thank R. Veugelers and J. Konings. Also the help by the other members of the author's transfer committee, R. De Bondt, S. Estrin, M. Jackson and L. Sleuwaegen through very helpful encouraging comments is gratefully acknowledged, as well as the suggestions on empirical sources by K. Meyer and on analytical modelling by S. Vannini. All errors and fallacies remain ours. Comments of any kind are very welcome. Conclusion 111.2.1 Entry deterrence 111.2.2 Waiting under uncertainty and learning from it 111.2.3 Strategic trade policy 111.2.4 Union-firm bargaining and delocalisation 111.2.5 Our research agenda: a tentative integrated model Annabel Sels, research report, February 1996 I See, in view of this, also the latest ACE-report on the topic, Rojec et al. (1995). 2The IMF balance of payments yearbook requires a benchmark of 10%, which is the rule in most OECD countries.
Foreign Direct Investments and Regional Development in Romania
2012
After the year 2000, as business was improving and the flat tax was introduced, the positive perception of Romania by partners has attracted major capital flows in the national economy. Although industry is unanimously considered to be a major source of economic and social imbalance, yet in time it has proved to be by far more attractive to foreign investors than agriculture and tourism, which have a remarkable potential in this country. Major foreign investments are located in the main urban centres, because they are more easily accessible and more open to establishing relations and have a more dynamic economic milieu. Bucharest continues to hold a dominant position, either by hosting foreign companies, or simply their headquarters. Next come the regional capitals, basically cities with more than 300,000 inhabitants, with a large sphere of influence and capacity of coordinating the regional economic space. Moreover, present evolutions have shown that Romania is likely to loose its cheap labour advantage, a situation that makes its further attractiveness for international investment flows really questionable.