Direct Investment In Transition Economies Research Articles

Developing Local Entrepreneurship Ecosystems by Foreign Investment

The importance of foreign direct investment in transition economies has significantly increased over the last several decades. Foreign investors are recognized as important drivers shaping the local entrepreneurial ecosystem. This paper aims to explore investors’ satisfaction with the factors previously identified as important for improving entrepreneurial ecosystems, that is, factors that both positively contribute to the development of local businesses as well as generate further foreign investment flow. Empirically we draw upon small case studies with managers of 38-42 key foreign investor companies in Latvia conducted in 2015, 2016, 2017, and 2018. In the first data collection wave, we identify key challenges that foreign investors face in Latvia. In the following data collection waves, we measure the development in the identified areas of concern and thus the overall entrepreneurial ecosystem of Latvia. Given that Latvia is a transition country in the advanced stage of development, the focus is on issues related to productivity and value added, including the availability of high quality labor force, the efficiency of public sector, and favorable tax regimes as well as challenges posed by unethical and illegal behavior, labor shortages, and elements of uncertainty. Our results suggest that foreign investors see a number of challenges within the all afore-mentioned areas that are important parts of the entrepreneurial ecosystem. Moreover, our findings suggest that progress with regards to the improvement of certain areas such as those mentioned previously from the viewpoint of foreign investors, was relatively slow during the period of 2015-2018. Our key contribution is providing with an in- depth analysis of factors shaping the entrepreneurial ecosystem in an advanced transition economy-from the viewpoint of foreign direct investors. We explore investors’ opinions with regard to the investment climate to summarize investors’ suggestions on how the entrepreneurial ecosystem in Latvia could be further developed. Our findings provide a scope for tailor-made, targeted policy recommendations to achieve these goals.

The impact of IFRS adoption on influx of foreign direct investment in transition economies

The impact of IFRS adoption on influx of foreign direct investment in transition economies

Determinants of Foreign Direct Investment in Transition Economies: Focusing on Kazakhstan, Uzbekistan and Mongolia

This paper attempts to investigate determinants of foreign direct investment in transition countries of Mongolia and Central Asia representative countries of Kazakhstan and Uzbekistan. FDI inflows in this transition economies have been far increasing due to their rapid growth, GDP, gross capital formation, wage, labor force, open trading, infrastructure and natural resources as well as the factors demonstrating the economic variables and political variables of these countries by using panel data period of 1993-2013. To do this task, important econometric methods are fulfilled to test the model adequately, such as panel unit root and panel co-integration test. In addition, the study incorporated the Vector Error Correction Model methods. The results of empirical analysis confirmed that FDI and infrastructure and labor wage and open trade and political than GDP, gross capital formation, labor force and natural resources had a significant impact on Kazakhstan, Uzbekistan and Mongolia. In addition, if Kazakhstan, Uzbekistan and Mongolian countries can maintain the country`s economic growth, reduce unemployment level, achieve certain improvements in domesticating new technologies and improving skills and knowledge sphere as well as promoting stable domestic price increase, attracting and improving the FDI by paying more attention to the indicators focusing on country`s GDP, gross capital formation, labor force and natural resources.

The Determinants of Foreign Direct Investment in Transition Economies: A Meta‐analysis

AbstractIn this paper, we conduct a meta‐analysis of studies that empirically examine the relationship between economic transformation and foreign direct investment (FDI) performance in Central and Eastern Europe and the former Soviet Union over the past quarter century. More specifically, we synthesise the empirical evidence reported in previous studies that deal with the determinants of FDI in transition economies, focusing on the impacts of transition factors. We also perform meta‐regression analysis to specify determinant factors of the heterogeneity among the relevant studies and the presence of publication‐selection bias. We find that the existing literature reports a statistically significant non‐zero effect as a whole, and a genuine effect is confirmed for some FDI determinants beyond the publication‐selection bias.

The impact of cross-border acquisitions in Serbia on productivity, wages, and employment

Globalization created a new business environment, characterized by intensive privatization and economic liberalization. The changed business environment opened the way to increased use of crossborder acquisitions, which make the lion?s share of foreign direct investment in transition economies. The acquisitions accelerate transition, facilitating the restructuring of state-owned enterprises and making them more efficient. This paper analyses the impact of cross-border acquisitions in Serbia, an economy in transition, on employee productivity, employment, and wages in acquisition targets. Statistical analysis of a sample comprising 79 cross-border acquisitions carried out in Serbia in the period 2003-2009 shows that the change of ownership had a positive impact on employee productivity and real wages, while the number of employees in the acquired enterprises decreased.

Foreign direct investment in transition economies: the regional structure and peculiarities of development in Belarus

The spatial structure of the world economy is divided into countries of economic center,semi-periphery and periphery. Changes of the spatial structure of the world economy and globalizationtrends are marked. A key element of the growing of globalization process is foreign direct investment(FDI) and activities of transnational corporations. Declining trend in foreign direct investmentis marked in conditions of instability of world economic development, shifts in FDI regional structureand their impact on countries with developing market economies. On the basis of the regional monitoringof the foreign direct investment the CIS market is described, in particular of the countries ofthe Customs Union and Belarus. The volumes of the Belarusian direct investment abroad are outlined,the forms of presence in foreign markets are indicated, the development of the commodity distributionnetworks, created by Belarusian enterprises and geography of inflow and outflow of FDI, is analyzed.The directions of improving the investment climate in Belarus and improve its position in the worldrankings are marked.

Attracting foreign direct investment in transition economies with special reference to the Republic of Macedonia

The focus of this paper is an analysis of foreign direct investment and their impact and scale in countries in transition, with special reference to Macedonia. The main aim of this article is to show the investment in Macedonia, in the period before and after the crisis of 2007 and to provide guidance for future activities that will help improve the economic situation in general. The results show that the Macedonian economy is especially supported by active government action on this issue. Government and its activities significantly improve the position of Macedonia in relation to neighboring countries, but there are still areas that need to act. Such domain infrastructure is an issue that would fulfill the image of Macedonian policy for attracting foreign investors. The conclusion is that despite all activities there are determinants that affect traditional markets. The most important of them is the level of gross domestic product. Macedonia has taken many measures to increase the level of GDP and in the level of attracting foreign capital has introduced tax benefits, customs benefits and other benefits with which is competitive with neighboring countries. However, GDP and employment are still not satisfactorily reflected.

Interaction between foreign financial services and foreign direct investment in Transition Economies: An empirical analysis with focus on the manufacturing sector

This paper studies the nexus between financial and non-financial foreign direct investment in Transition Economies, which are members of the EU. Three questions, which are pointed out in the theoretical literature, are discussed in the paper. We use a dataset for nine Transition Economies over the period 1996–2007, for most regressions we apply GMM and for one regression 2SLS. The empirical results lead to three important statements: non-financial FDI is positively affected by financial services FDI and by market potential. Foreign banks in the EU Transition Economies are mainly driven by non-financial FDI and the capital intensity of a country. FDI crowds out domestic investment in the manufacturing sector.

Determinants and role of foreing direct investment in transition economies:with special look in FYR of Macedonia

The aim of this paper is to provide clear insight about the determinants and role of FDI in transition country with particular reference in FYR of Macedonia. We are using a panel dataset for twenty seven - 27 transition countries over the period 1997 to 2009. Applying static and dynamic modeling, econometrics findings have driven as to dynamic models. Inthe same empirical investigations following variables have been tested: GDP of the host and source country, unit labour cost, trade inflation, legal environment, distance, dummy variables capturing the language, common border and colonizing effect. Empirical result confirms expectation of the chosen variables as well as the positive feedback effect of past FDI onto current FDI. While the negative and significant coefficient of distance indicates that FDI is determined by gravity factors, the positive relationship between FDI stock and unit labour cost is explained through the effect of the service sector on wages. In addition, countries having higher trading shares attract more FDI. Low inflation rate as well as efficient legal system should be taken as a good sign for attracting more FDI flows since it has a positive impact on foreign investors. Dummy for English language, which indicates countries where English language is official or widely spoken in that country, have less language difficulties and more FDI flows with FYR of Macedonia.At the same time, income level of the host country is found to be important determinant for foreign investors. Moreover, FDI role in FYR of Macedonia has been found as crucial in many aspects of country’s economic development and sustainability. Apart from accelerated growth, technical innovation and enterprise restructuring, FDI in this transition country gave considerable contribution to the financial potential improvement.

Foreign Direct Investment In Transition Economies: An Institutional Approach

Foreign direct investment (FDI thereafter) is very important for economic growth in transition economies. They have major impact in economic development as a source of physical capital, diffusion of technology, improvements in management and marketing techniques, and enhancing institutional setting of these economies toward market oriented. In this paper, an institutional approach to FDI inflow is investigated to identify relevant factors that have shaped and influenced transition economies. The role of institutions in the inflow of FDI in transition economies is estimated empirically by using Seemingly Unrelated Regression Estimation (SURE) technique.

Interaction between Foreign Financial Services and Foreign Direct Investment in Transition Economies: An Empirical Analysis with Focus on the Manufacturing Sector

This paper studies the nexus between financial and non-financial foreign direct investment and its effect on manufacturing value added in Transition Economies, which are members of the EU. Three questions, which are pointed out in the theoretical literature, are discussed in the paper. We investigate whether financial services foreign direct investment has an effect on non-financial foreign direct investment; whether banks follow their clients; and whether there is any effect of foreign direct investment on economic growth. Those questions are tackled with empirical analysis using a dataset for 9 Transition Economies over the period 1996-2007. For most regressions we apply GMM and for one regression 2SLS, to tackle the endogeneity problem. The empirical results lead to three important statements: Non-financial FDI is positively affected by financial services FDI and by market potential. Foreign banks in the EU Transition Economies are mainly driven by non-financial FDI and the capital intensity of a country. FDI crowds out domestic investment in the manufacturing sector.

Foreign Direct Investment and Institutional Environment in Transition Economies

We analysed the relation between foreign direct investment and the quality of the institutional environment in transition economies. The analysis confirmed a significant impact of various institutional aspects on the inflow of foreign capital. To isolate the importance of the institutional environment from the impact of other factors, a panel data analysis was performed using the data of 24 transition economies in the period 1995–2002. The results showed that in the observed period the quality of the institutional environment significantly influenced the level of foreign direct investment in transition economies. Other variables that proved to have a statistically significant influence were budget deficit, insider privatization, and labour cost per hour.

Foreign Direct Investment in Transition Economies: Focusing on Russia

The objective of this paper is to make the factors which provided for sluggish inflow of foreign direct investment (FDI) in Russia clear, based on the geography and empirical analysis of determinants of FDI to transition countries. As a result, the existence of peculiar or very conspicuous investment disincentives in Russia was proved. The former is the nationalism to resources and the complexity of relation between the central and local government. The latter is the uncertainty on

Foreign Direct Investment in Transition Economies: Evidence from Energy Industry

The paper presents econometric analysis of foreign direct investment inflows to transition economies. Panel data for 25 countries of Central & Eastern Europe and Commonwealth of Independent States suggests on differences in FDI determinants in these two regions. Energy industry is given deeper insight due to its importance in investment attraction. Empirical results reflect deeper research on resource seeking FDI to CIS (primarily Russia) where production and consumption of various energy types is considered. The paper also spills light on the history of economic though on international capital movement from Marx to Dunning.

Foreign Direct Investment in Transitional Economies: A Case Study of China and Poland (review)

Foreign Direct Investment in Transitional Economies: A Case Study of China and Poland (review)

Foreign Direct Investment in Transition Economies: The Case of Coca-Cola in Russia

The paper advances several theoretical and practical developments underlying the foreign direct investment episodes of multinational corporations in transition economies, most particularly Eastern Europe. Following this, arguments are developed and discussed concerning the liberalization of the Russian economy and the changing consumer, management, organizational, and investment traditions therein. A case example of the Coca-Cola Company in Russia is both presented and analyzed. Reference is made to the experience of this company concerning its: market entry; market development; market expansion; strategic problems and barriers to expansion; and, late versus first-mover advantages in an emerging market of this transition economy. Various conclusions are drawn from this case and inferences are made for theoretical developments and company strategy in the specific field of foreign direct investment in transition economies.

Geography Matters: Kohonen Classification of Determinants of Foreign Direct Investment In Transition Economies

This exploratory study examines the extent to which non-spatial determinantsof foreign direct investment (FDl) organize themselves in a mannerthat mimics the spatial proximity of twenty-five Eurasian transition economies.The Kohonen algorithm is used to create a self-organizing map (SOMs)of a data set that features vectors of twenty-one socioeconomic variables. Inthis analysis, clusters emerge among the Central European, Balkan, Baltic,and Caucasus/Central Asian regions, leaving Russia as a regional outlier.By introducing SOMs to the discussion of FDI and the factors governing itsdistribution, we demonstrate an untapped utility in the visualization andanalysis of economic data.