The determinants and impact of foreign direct investment in Central and Eastern Europe: A comparison of survey and econometric evidence

Benacek V, Gronicki M, Holland D, & Sass M (2000). The determinants and impact of foreign direct investment in Central and Eastern Europe: A comparison of survey and econometric evidence. Transnational Corporations 9 (3): 163-212.

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Abstract

This note considers evidence that has been collected on the determinants and effects of foreign direct investment in Central and Eastern Europe, with a strong focus on Hungary, Poland and the Czech Republic. There are two main sources from which information is drawn: survey studies and econometric studies. We consider how each of these sources can contribute to research, whether they provide complementary or contradictory information, and how the information can be best exploited. We conclude that the findings of econometric studies tend to support survey results. This suggests that market size and growth potential have been the driving forces behind foreign direct investment, with factor-cost advantages playing a lesser, but still significant role. Macroeconomic and political stability were also taken into account. Investment incentives have not had a decisive influence on foreign direct investment inflows; however, the privatization process has affected the timing of foreign direct investment. Access to markets has been the primary motive for foreign direct investment; however, the absence of trade barriers and membership in free trade areas have been important for export-oriented investments. Foreign direct investment inflows have improved the overall growth potential of the economies under consideration, primarily through productivity improvements within foreign affiliates, rather than through linkages with domestic firms or spillovers.

Item Type: Article
Research Programs: Economic Transition and Integration (ETI)
Bibliographic Reference: Transnational Corporations; 9(3):163-212 [2000]
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:11
Last Modified: 29 Aug 2016 13:47
URI: http://pure.iiasa.ac.at/5953

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