Foreign Direct Investment In Transition Economies Research Articles

The Impact of the Investment Environment on Foreign Direct Investment (FDI) in the European Transition Economies

The main objective of this paper is to investigate the impact of the investment environment on FDI in transition economies in Europe, through the usage of dynamic panel methodology, due to the persistence of the endogeneity issues. Further, three main factors have been determined affecting the FDI in 15 developing countries through the time span 2009–2016 as Control of Corruption, Political Stability and Absence of Violence/Terrorism and Distance to frontier score (Doing Business) having positive and significant effect on attracting FDI in these transition countries. Also as pull factors are used GDP per capita, profit tax rate showing positive and significant effect on FDI flows, while unemployment rate was positive but does not have a significant role in the attraction of FDI flows in European transition countries. In addition, to our best knowledge this paper is among the first that attempts to investigate this relationship in this set of countries by employing the dynamic panel methodology using differenced GMM model as well as employing Distance to frontier score (Doing Business) as one of investment environment factors that impact FDI flows for this set of 15 countries. Furthermore, such findings will contribute to the existing literature by using these instruments to measure their impact on FDI attractiveness on European transition economies.

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.

Technology transfer and spillovers from FDI in transition economies: A meta-analysis

In this paper, we conduct a meta-analysis of the literature that empirically examines the microeconomic impacts of foreign direct investment (FDI) in Central and Eastern Europe and the former Soviet Union. The meta-synthesis of estimates collected from relevant studies shows that both the effect size and the statistical significance of the indirect effect of FDI, namely the productivity spillover effect, are obviously lower than those of the direct effect caused by foreign participation in company management through ownership. Moreover, the meta-regression analysis reveals that, probably due to the presence of publication selection bias, previous studies have not yet provided empirical evidence of a non-zero productivity spillover effect in the region. Further research efforts are required to capture the true effect.

Is It Possible To Govern Foreign Investments? Balancing Between Klondike And Poltava

FDI (foreign direct investment) of Swedbank in Ukraine is an example of unsuccessful investment in transition economies. The Case Study is presented in relation with Swedbank’s internationalization strategy and rapidly changing investment environment in transition economies and globally. Learning objectives include helping students to develop analytical skills in order to understand how political, economic, financial and social factors effect internalization strategy through FDI. The Case Study should help students to understand the importance of an appropriate long-term strategy of a firm entering transition economies, understand the investment environment of a foreign country and choose the best course of action for a distressed firm considering alternative scenarios. Lessons learned from the Case Study can be beneficial for students studying international business, but also for future decision-makers that would be acting in complex environments under rapidly changing situations. The author developed the Case from secondary sources: Swedbank’s annual reports and press-releases, information published by multilateral organizations and government agencies, research from investment banking houses and reputable news agencies. This Case is written solely for educational purposes and is not intended to analyze successful or unsuccessful internalization strategy through FDI in transition economies.

Macroeconomic Impacts of FDI in Transition Economies: A Meta-Analysis

In this paper, we conduct a meta-analysis of the literature that empirically examines the impact of foreign direct investment (FDI) on economic growth in Central and Eastern Europe and the former Soviet Union. We found that existing studies indicate a growth-enhancing effect of FDI in the region as a whole. The results of our meta-regression analysis suggest that the effect size and statistical significance of the reported estimates strongly depend on study conditions. We also found that the relevant studies fail to present genuine evidence of a non-zero FDI effect. More research is necessary to identify the true effect.

The Effects of Foreign Direct Investment Flows in Developing Process of Countries of Western Balkan

Following a period of isolation up to 1990-s, in an era of transition, WB countries faced tough challenge of achieving a market framework and integration their economies with the rest of the world. The early years of transition were characterized by decentralizing their economies and intensified efforts to attract Foreign Direct Investment (FDI). This issue is particularly important in terms of the global economic crisis, when FDI was recognized as one of the key generators of recovery of the economy of many countries. The paper examines the trends in FDI flows and its economic, social and environmental impacts in host countries.Establishment of the legal, macroeconomic and institutional framework provide the necessary impetus towards FDI inflows also it is a necessary condition of development of industry and reintegration into global economic flows. Unfortunately, unlike the countries of Central and Eastern Europe, in terms of destination of FDI, WB is less targeted region. FDI inflows in the region of WB, neither in scope nor the structure was not sufficient for the restructuring of economic activities and increase export competitiveness. The entry of FDI in transition economies was caused primarily by the privatization process.The purpose of this paper is to present a comparative analysis of the effects of FDI on economic development selected economies of WB region. Also it analyzes the ongoing trends in attracting FDI also it draws attention to their importance for the accelerated economic development in the future. In our analysis we use annually data series which are sourced from the following IMF databases: UNCTAD, World Bank, from the national central banks, their annual reports. The data covers the period between 2006-2011 and included 6 countries of Western Balkan (WB): Albania, Bosnia and Herzegovina, Croatia, Macedonia FYR, Montenegro, and Serbia.The paper is divided into five sections. Section 2 analyzes the impact of capital account liberalization on the economy of WB countries, then following analyze position and characteristics of business environment and competitive position of selected economies. Section 4 gives an overview of the FDI inflows and and issues related to FDI attraction.The findings and discussion presented in previous sections of this article ends with conclusions that greater inflow of FDI could affect the change in the structure of production and exports of WB countries, and thus to increase the competitiveness of domestic companies in foreign markets.

Entry Modes and Firm Performance in a Transition Economy: Evidence from Inward FDI to Romania

The article analyzes the characteristics and performance of foreign direct investment (FDI) to Romania since the 1990s. We provide evidence for some of the commonly advanced propositions about FDI in transition economies, namely the selection of entry and firms’ performance over time and across economic sectors. Contrary to the FDI literature, multinational enterprises in Romania favored greenfield FDI over acquisitions, although this does not apply to oligopolistic and technology intensive industries. Specific relationships between the nationality of the investor, the location and the entry modes decisions are also analyzed. We observed that acquisitions exhibited higher profit margin and turnover compared to greenfield FDI.

Foreign Direct Investment Patterns in Transition Economies: An Evolutionary Game - Theoretic Perspective of the 1990s

The strategic interdependence between market reforms and foreign direct investment (FDI) in transition economies in the 1990s is presented in an evolutionary game-theoretic framework. The static game has two equilibria: in one, FDI contributes to economic restructuring through acquisitions in host countries with rapid market reforms; in the other, slow reform motivates firms to minimize exposure to operational uncertainties through new plant investments. Here FDI plays only a mediating role in economic reform. In a dynamic setting, these equilibria serve to establish conventions about how to invest in countries at different stages of transition. Empirical evidence drawn from U.S. FDI in transition economies further illustrates the model’s equilibria.

Better the devil you don't know: Types of corruption and FDI in transition economies

Abstract Corruption has a negative impact on foreign direct investment (FDI). However, transition economies show high levels of corruption and also high levels of FDI. I argue that it is not the level but rather the type of corruption that affects FDI in transition economies. Pervasive corruption, or corruption that is widely present, acts as a deterrent to FDI because it increases the known costs of investing, while arbitrary corruption, or corruption that is uncertain, does not have such a deterring influence because it becomes part of the uncertainty of operating in transition economies. In transition economies, investors prefer to deal with an unknown evil – arbitrary corruption – rather than a known one – pervasive corruption.