Institutional, economic and regional determinants of foreign direct investments in the Balkan, Central European and ex-Soviet transition economies

• Main Author: Bellos, Sotirios
• Other Authors: Subasat, Turan
• Published: University of Bath 2010
• Subjects: 300
• Online Access: https://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.525540

The study focused on the transition economies of South Eastern Europe, Central Europe and those of the ex-Soviet countries, during the period 1990-2005. <br /> The main research aims included the identification of the distinct FDI features, the research for FDI determinants and the relation between FDI and the host countries’ institutions with a particular emphasis on corruption and poor governance phenomena. Additional to that the study shed light on the impact of transition process reforms on FDI. The research employed a variety of different data sources and empirical methods, in order to achieve its goals. <br /> The empirical analysis indicated that foreign investments in the area of interest were not particularly affected by the presence of corruption. Actually, foreign investors were rather encouraged by both high corruption and the low governance levels. Regarding FDI features, the formulated view is of foreign investments as business entities with secured financial support, export orientation, not significant contribution to labour skills and production increase and with a rather indifferent approach towards taxation. <br /> With regards to FDI determinants, the empirical results highlighted the host country’s market potential, the privatization opportunities both at small and large scale, the existence of strategic natural resources, the quick implementation of the transition reforms in terms of competition policies, trade and prices liberalization and banking reforms, while also the existence of an adequate and exploitation promising infrastructure.