Abstract
This paper presents an original approach to the investment attractiveness of the countries. The author developed an index of investment attractiveness which takes into account indicators of cultural specificity. The specialty literature offers a variety approaches in which different factors that are considered determinants of foreign direct investment (FDI) are analyzed. However, even if cultural are frequently mentioned (and sometimes analyzed), they rarely represent an object of the research of FDI determinants. As for the indexes of investment attractiveness identified in the literature, the situation is even more difficult, and the cultural factors seem to be avoided. The elaboration of the Culture-specific Investment Attractiveness Index through the application of the Principal Component Analysis technique proved to be efficient, the new construct being reliable. Further analysis of the connection between the Index and the volume of FDI attracted confirm its suitability for explaining the localization of FDI in Europe.
Highlights
Economic growth has been the main object of the research in economic science since its beginnings
Not any foreign investments provide a basis for economic growth like foreign direct investments (FDI) do
FDI is driven by a multitude of factors, among which some of the above mentioned, given the link between FDI and economic development: the country’s economic growth is associated with the potential profitability of the investments, and determines the attraction of a larger volume of FDI
Summary
Economic growth (the wealth of nations) has been the main object of the research in economic science since its beginnings. Even if specialization, free exchange and the efficiency of institutions are guaranteed, factors such as capital deficit and lack of access to technologies and know-how can lead to the economic underdevelopment of the country In this context, foreign investment represents the means by which the transfer of capital, technology and know-how from rich countries to poor ones can be achieved, ensuring rapid economic growth, though at a high cost (Heyne et al, 2011). Specialty literature offers a wide range of such indicators, of a different nature, developed or just applied in the context of FDI research: FDI confidence index (Kearney, 2005), FDI The last section discusses the conclusions, the limitations and the directions for future research
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