Investment Development Path in the European Union in the Context of Financial Crisis

Abstract

Since the start of foreign direct investment (FDI) studies, scholars asked themselves what drives companies to invest abroad, what incentives are needed to start the flow of FDI to one destination country and how is the flow changing as that countries development is more and more advanced. The academic community launched the hypothesis that the level of development of one country influences the flow of FDI, also known as the investment development path theory. This article is a case study of EU member states as the EU is one of the most advanced forms of cooperation between countries in the world and the flow of FDI has a great impact on its development. The authors follow the evolution of FDI since the year 2000, including the effects of the financial crisis on the flows of FDI, and their post-crisis recovery, and the correlation of the net output investment per capita of FDI with the GDP per capita levels.