IDEAS home Printed from https://ideas.repec.org/a/kap/iecepo/v15y2018i3d10.1007_s10368-017-0377-3.html
   My bibliography  Save this article

Ease of doing business and FDI in the ex-socialist countries

Author

Listed:
  • Branimir Jovanovic

    (Institute of Social Sciences and Humanities, Skopje, Republic of Macedonia, and CERGE-EI)

  • Biljana Jovanovic

    (National Bank of the Republic of Macedonia)

Abstract

This study investigates if ease of doing business, measured through the Doing Business indicators of the World Bank, affects foreign direct investment in 27 ex-socialist countries. Classical and Bayesian econometric techniques are employed. Results point out that there is a lot of uncertainty regarding the effects, with most of the indicators being either insignificant or lacking robustness. The only aspect of the business regulation that stands out as a robust determinant in the two estimations is the ease of trading across borders.

Suggested Citation

  • Branimir Jovanovic & Biljana Jovanovic, 2018. "Ease of doing business and FDI in the ex-socialist countries," International Economics and Economic Policy, Springer, vol. 15(3), pages 587-627, July.
    • Handle: RePEc:kap:iecepo:v:15:y:2018:i:3:d:10.1007_s10368-017-0377-3
    DOI: 10.1007/s10368-017-0377-3
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10368-017-0377-3
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10368-017-0377-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Elizabeth Asiedu, 2006. "Foreign Direct Investment in Africa: The Role of Natural Resources, Market Size, Government Policy, Institutions and Political Instability," The World Economy, Wiley Blackwell, vol. 29(1), pages 63-77, January.
    2. Agnès Bénassy‐Quéré & Maylis Coupet & Thierry Mayer, 2007. "Institutional Determinants of Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 30(5), pages 764-782, May.
    3. Susana Assunção & Rosa Forte & Aurora A. C. Teixeira, 2011. "Location Determinants Of Fdi: A Literature Review," FEP Working Papers 433, Universidade do Porto, Faculdade de Economia do Porto.
    4. Hendry, David F., 2000. "Econometrics: Alchemy or Science?: Essays in Econometric Methodology," OUP Catalogue, Oxford University Press, number 9780198293545.
    5. Jayasuriya, Dinuk, 2011. "Improvements in the World Bank's ease of doing business rankings : do they translate into greater foreign direct investment inflows ?," Policy Research Working Paper Series 5787, The World Bank.
    6. Demekas, Dimitri G. & Horvath, Balazs & Ribakova, Elina & Wu, Yi, 2007. "Foreign direct investment in European transition economies--The role of policies," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 369-386, June.
    7. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    9. Shang-Jin Wei, 2000. "How Taxing is Corruption on International Investors?," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 1-11, February.
    10. Carstensen, Kai & Toubal, Farid, 2004. "Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 3-22, March.
    11. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    12. Selen Guerin & Stefano Manzocchi, 2009. "Political regime and FDI from advanced to emerging countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 75-91, April.
    13. Emmanuel Cleeve, 2008. "How effective are fiscal incentives to attract FDI to Sub-Saharan Africa?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 42(1), pages 135-153, September.
    14. G. D. A. MacDougall, 1960. "THE BENEFITS and COSTS OF PRIVATE INVESTMENT FROM ABROAD: A THEORETICAL APPROACH," The Economic Record, The Economic Society of Australia, vol. 36(73), pages 13-35, March.
    15. Pain, Nigel, 1993. "An Econometric Analysis of Foreign Direct Investment in the United Kingdom," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(1), pages 1-23, February.
    16. Adrian Corcoran & Robert Gillanders, 2015. "Foreign direct investment and the ease of doing business," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(1), pages 103-126, February.
    17. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
    18. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
    19. James Love & Francisco Lage-Hidalgo, 2000. "Analysing the determinants of US direct investment in Mexico," Applied Economics, Taylor & Francis Journals, vol. 32(10), pages 1259-1267.
    20. Sufian Eltayeb Mohamed & Moise G. Sidiropoulos, 2010. "Another Look At The Determinants Of Foreign Direct Investment In Mena Countries: An Empirical Investigation," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(2), pages 75-95, June.
    21. Markus Leibrecht & Johann Scharler, 2009. "How important is employment protection legislation for Foreign Direct Investment flows in Central and Eastern European countries?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 17(2), pages 275-295, April.
    22. Bruce Blonigen, 2005. "A Review of the Empirical Literature on FDI Determinants," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 383-403, December.
    23. Fritz Breuss & Peter Egger & Michael Pfaffermayr, 2010. "Structural funds, EU enlargement, and the redistribution of FDI in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 469-494, September.
    24. Kravis, Irving B. & Lipsey, Robert E., 1982. "The location of overseas production and production for export by U.S. multinational firms," Journal of International Economics, Elsevier, vol. 12(3-4), pages 201-223, May.
    25. Barrell, Ray & Pain, Nigel, 1996. "An Econometric Analysis of U.S. Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 200-207, May.
    26. Romita Biswas, 2002. "Determinants of Foreign Direct Investment," Review of Development Economics, Wiley Blackwell, vol. 6(3), pages 492-504, October.
    27. John Dunning, 1981. "Explaining the international direct investment position of countries: Towards a dynamic or developmental approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 117(1), pages 30-64, March.
    28. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elena Makrevska Disoska & Katerina Toshevska-Trpchevska & Irena Kikerkova & Elena Naumovska, "undated". "Panel Data Analysis Of The Impact Of Economic And Institutional Factors Upon The Fdi Inflow In See Countries," Review of Socio - Economic Perspectives 201824, Reviewsep.
    2. Meqbel Mishary Aliedan, 2020. "Overall business climate and its impact on environmental sustainability: analyzing evidence from ASEAN countries," Post-Print hal-03121009, HAL.
    3. Aneta Hintošová & Terézia Barlašová, 2021. "The Role Of Investment Promotion Policy In Attracting Foreign Direct Investment: The Case Of Slovakia," Public administration issues, Higher School of Economics, issue 5, pages 27-40.
    4. Vogiatzoglou Klimis, 2018. "Differences in Inward FDI Performance Between the Southern Eurozone and Eastern EU Members: A Panel-Data Analysis Over 2004-2016," Economic Themes, Sciendo, vol. 56(4), pages 519-532, December.
    5. Zhenkuo Ding & Man Hu & Sheng Huang, 2023. "Diplomatic Relations and Firm Internationalization Speed: The Moderating Roles of Trade Openness and Firm Ownership," Management International Review, Springer, vol. 63(6), pages 911-941, December.
    6. Qian, Xinbei & Huang, Liangxiong & Wang, Xianbin & Wang, Shuqi, 2022. "Detecting pivotal countries of China's OFDI in the “Belt and Road” initiative: The perspective of similarity of doing business," International Review of Economics & Finance, Elsevier, vol. 77(C), pages 296-311.
    7. Xinbei Qian & Dexue Liu & Liangxiong Huang & Hanchao Li, 2022. "Distance of doing business and outward foreign direct investment: An empirical study of China," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1411-1437, August.
    8. Nicky Rogge & Alena Kolyaseva, 2022. "Measuring and comparing World Bank regions’ ‘ease of doing business’ opportunity sets," Journal of Productivity Analysis, Springer, vol. 57(2), pages 131-155, April.
    9. Yan Han & Cheng Pan & Fengjun Jin, 2023. "Does the Improvement of the Business Environment Improve the Innovation Efficiency of Enterprises? Evidence from the Listed Companies in China," Sustainability, MDPI, vol. 15(14), pages 1-25, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment – A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, February.
    2. Paulo Júlio & Ricardo Pinheiro–Alves & José Tavares, 2013. "Foreign direct investment and institutional reform: evidence and an application to Portugal," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(3), pages 215-250, December.
    3. Konstantinos Dellis, 2018. "Financial development and FDI flows: evidence from advanced economies," Working Papers 254, Bank of Greece.
    4. Mariam Camarero & Laura Montolio & Cecilio Tamarit, 2020. "Determinants of FDI for Spanish regions: evidence using stock data," Empirical Economics, Springer, vol. 59(6), pages 2779-2820, December.
    5. Mariam Camarero & Laura Montolio & Cecilio Tamarit, 2019. "Determinants of German outward FDI: variable selection using Bayesian statistical," Working Papers 1906, Department of Applied Economics II, Universidad de Valencia.
    6. Camarero, Mariam & Montolio, Laura & Tamarit, Cecilio, 2019. "What drives German foreign direct investment? New evidence using Bayesian statistical techniques," Economic Modelling, Elsevier, vol. 83(C), pages 326-345.
    7. Perez, M. Fabricio & Brada, Josef C. & Drabek, Zdenek, 2012. "Illicit money flows as motives for FDI," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 108-126.
    8. Federico Carril-Caccia & Juliette Milgram-Baleix & Jordi Paniagua, 2019. "Foreign Direct Investment in oil-abundant countries: The role of institutions," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-23, April.
    9. Barli Suryanta & Arianto A. Patunru, 2023. "Determinants of Foreign Direct Investment in Indonesia," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(1), pages 109-131, January.
    10. Bitzenis, Aristidis & Tsitouras, Antonis & Vlachos, Vasileios A., 2009. "Decisive FDI obstacles as an explanatory reason for limited FDI inflows in an EMU member state: The case of Greece," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(4), pages 691-704, August.
    11. Bailey, Nicholas, 2018. "Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review," International Business Review, Elsevier, vol. 27(1), pages 139-148.
    12. Maria Borga & Perla Ibarlucea Flores & Monika Sztajerowska, 2020. "Drivers of divestment decisions of multinational enterprises - A cross-country firm-level perspective," OECD Working Papers on International Investment 2019/03, OECD Publishing.
    13. Brinda Sooreea-Bheemul & Uzma Shataz Rasool & Rajeev Sooreea, 2020. "Does Economic Freedom Matter to Foreign Direct Investment in Sub-Saharan Africa?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 195-207.
    14. Dellis, Konstantinos & Sondermann, David & Vansteenkiste, Isabel, 2022. "Drivers of genuine FDI inflows in advanced economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 84(C), pages 407-419.
    15. Raphaël Chiappini, 2014. "Institutional Determinants of Japanese Outward FDI in the Manufacturing Industry," GREDEG Working Papers 2014-11, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    16. Paulo Júlio & Ricardo Pinheiro-Alves & José Tavares, 2013. "Foreign investment and institutional reform: Portugal in European perspective," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    17. Zaneta Kubik, 2023. "The role of agricultural sector performance in attracting foreign direct investment in the food and beverages sector. Evidence from planned investments in Africa," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 875-903, July.
    18. Andreia Olival, 2012. "The influence of Doing Business’ institutional variables in Foreign Direct Investment," GEE Papers 0048, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2012.
    19. Dalila Nicet-Chenaf & Eric Rougier & Kamel Abdellah, 2012. "FDI and macroeconomic volatility: a close-up on the source countries," Post-Print hal-00798467, HAL.
    20. Groh, Alexander P. & Wich, Matthias, 2009. "A composite measure to determine a host country's attractiveness for foreign direct investment," IESE Research Papers D/833, IESE Business School.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:iecepo:v:15:y:2018:i:3:d:10.1007_s10368-017-0377-3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.