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The determinants of FDI location choice in the Western Balkan countries

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  • Safet Kurtović
  • Nehat Maxhuni
  • Blerim Halili
  • Sead Talović

Abstract

This paper examines the effects of traditional, institutional and agglomeration determinants on the choice of FDI location on a sample of six countries of the Western Balkans. We used the partial adjustment model, the static and dynamic panels, the Generalised Method of Moments (GMM) and a time series from 2007 to 2017. We have found that traditional (GDP per capita and GDP growth rate), agglomeration (urbanisation rate, foreign agglomerations in the service sector and the number of employees in the service sector) and institutional determinants (government spending) have a positive impact on the choice of FDI location. Additionally, we have concluded that the above-mentioned determinants have a positive impact on the adjustment speed towards a balanced per capita FDI stock. There is no convergence with regards to FDI; however, convergence exists with regards to the unrealised FDI stock due to the equilibrium FDI convergence.

Suggested Citation

  • Safet Kurtović & Nehat Maxhuni & Blerim Halili & Sead Talović, 2020. "The determinants of FDI location choice in the Western Balkan countries," Post-Communist Economies, Taylor & Francis Journals, vol. 32(8), pages 1089-1110, November.
    • Handle: RePEc:taf:pocoec:v:32:y:2020:i:8:p:1089-1110
    DOI: 10.1080/14631377.2020.1722584
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    Cited by:

    1. Niaz Morshed & Mohammad Razib Hossain, 2022. "Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach," SN Business & Economics, Springer, vol. 2(7), pages 1-28, July.
    2. Mohammad Razib Hossain, 2021. "Inward foreign direct investment in Bangladesh: Do we need to rethink about some of the macro-level quantitative determinants?," SN Business & Economics, Springer, vol. 1(3), pages 1-23, March.
    3. Jelena Zvezdanoviæ Lobanova & Mikhail Lobanov & Milan, 2021. "Governance and civil and political rights as FDI determinants in transition countries," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 39(1), pages 59-86.
    4. Nathapornpan Piyaareekul Uttama & Rapipong Promnart, 2022. "Shadow economy and the efficiency of FDI inflow: the case of ASEAN economies," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 23(2), pages 136-155.
    5. Nathapornpan Uttama & Popkarn Arwatchanakarn, 2023. "How do economic complexity and productive capacities foster foreign direct investment flows? Evidence from the Asian economies," Economics Bulletin, AccessEcon, vol. 43(1), pages 629-643.
    6. Joel I. Deichmann & Stephen Grubaugh & Patrick Scholten, 2022. "FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 479-505, September.
    7. Safet Kurtović & Nehat Maxhuni & Blerim Halili & Bujar Krasniqi, 2022. "Does outward foreign direct investment crowd in or crowd out domestic investment in central, east and southeast europe countries? an asymmetric approach," Economic Change and Restructuring, Springer, vol. 55(3), pages 1419-1444, August.

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