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The CEEC as FDI Attractors: A Menace to the EU Periphery?

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Author Info

  • AURORA GALEGO
  • CARLOS VIEIRA
  • ISABEL VIEIRA

Abstract

The change of economic, social, and political orientation in Central and Eastern European countries (CEEC), together with the accession of a first group into the European Union in 2004, has raised a number of challenging questions. One object of interest has been the implications of Eastern openness in terms of international capital reallocation. This paper concentrates on the issue of foreign direct investment (FDI), a major channel of economic integration. In fact, in the particular case of these countries, a dramatic change in the pattern of FDI inflows took place in recent years. A number of studies have surveyed the determinants of FDI to this region, but the issue still remains relatively unexplored from the empirical point of view. Using a random effects panel data model in the analysis, we try to empirically uncover the main determinants of FDI and to examine the probability of FDI diversion from the EU periphery to these transition economies. This issue is especially interesting for the EU periphery in general, and for cheap labor suppliers such as Portugal in particular, because there are reasons to believe that some diversion of funds from the South to the East may be taking place.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 40 (2004)
Issue (Month): 5 (September)
Pages: 74-91

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Handle: RePEc:mes:emfitr:v:40:y:2004:i:5:p:74-91

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

Related research

Keywords: enlargement; FDI determinants; FDI diversion; foreign direct investment; gravity model;

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Citations

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Cited by:
  1. Narula, Rajneesh & Bellak, Christian, 2008. "EU enlargement and consequences for FDI assisted industrial development," MERIT Working Papers 067, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Andrea Gauselmann & Philipp Marek, 2012. "Regional determinants of MNE’s location choice in post-transition economies," Empirica, Springer, vol. 39(4), pages 487-511, November.
  3. Marek Tiits, 2005. "Technology-intensive Foreign Investments and Economic Development Strategy in a Small Country," Working Papers 01-2005, Institute of Baltic Studies.
  4. Chidlow, Agnieszka & Salciuviene, Laura & Young, Stephen, 2009. "Regional determinants of inward FDI distribution in Poland," International Business Review, Elsevier, vol. 18(2), pages 119-133, April.
  5. Brada, Josef C. & Kutan, Ali M. & Yigit, Taner M., 2004. "The effects of transition and political instability on foreign direct investment inflows: Central Europe and the Balkans," ZEI Working Papers B 33-2004, ZEI - Center for European Integration Studies, University of Bonn.
  6. Magdalena Radulescu & Elena Jianu, 2011. "FDIs in Spain after its EU Accession. Spanish Investments in Romania and How can be used Spanish Experience for Romania’s Development," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(2), pages 233-256.
  7. Agnieszka Chidlow & Stephen Young, 2008. "Regional Determinants of FDI Distribution in Poland," William Davidson Institute Working Papers Series wp943, William Davidson Institute at the University of Michigan.
  8. Bellak, Christian & Leibrecht, Markus & Riedl, Aleksandra, 2008. "Labour costs and FDI flows into Central and Eastern European Countries: A survey of the literature and empirical evidence," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 17-37, March.
  9. Pantelis Pantelidis & Efthymios Nikolopoulos, 2008. "FDI Attractiveness in Greece," International Advances in Economic Research, Springer, vol. 14(1), pages 90-100, February.

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