IDEAS home Printed from https://ideas.repec.org/h/ibg/chaptr/srbeu-2.html
   My bibliography  Save this book chapter

Attractiveness of Western Balkan Countries for FDI

In: Serbia and the European Union: Economic Lessons from the New Member States

Author

Listed:
  • Matija Rejec

    (University of Ljubljana, Faculty of Social Sciences)

  • Slavica Penev

    (Institute of Economic Sciences)

Abstract

Based on standard classification of competitive advantages of a country as investment location and complex international assessments of countries' competitiveness, the paper identifies competitive advantages and disadvantages of five Western Balkan countries (WB5), as FDI location. WB5 as a region lags behind EU27 and EU10 average in almost all relevant indicators of locational competitiveness. The identified competitive advantages of WB5 as a location for FDI are the following: stable macroeconomic environment, fast economic growth, geographical proximity to major EU markets, stable and relatively well developed financial system, relatively low cost and qualified labor, and EU Stabilization and Association Agreement with EU, CEFTA and other bilateral trade agreements. The most prominent weaknesses inhibiting more FDI inflows in WB5 are: small domestic market with low per capita income, relatively high country risk, slow progress in structural and institutional reforms, underdeveloped infrastructure, inefficient government bureaucracy and high administrative barriers. The papaer concludes that the main policy message arising from theoretical findings and empirical evidence suggest that the best way for WB5 to attract more FDI in the future is to strengthen the structural reforms and to speed up their EU approximation processes. Any specific FDI policies are only of a secondary importance.

Suggested Citation

  • Matija Rejec & Slavica Penev, 2011. "Attractiveness of Western Balkan Countries for FDI," Book Chapters, in: Mirjana Radovic Markovic & Srdjan Redzepagic & João Sousa Andrade & Paulino Teixeira (ed.), Serbia and the European Union: Economic Lessons from the New Member States, edition 1, volume 1, chapter 2, pages 27-46, Institute of Economic Sciences.
    • Handle: RePEc:ibg:chaptr:srbeu-2
    as

    Download full text from publisher

    File URL: http://www.ien.bg.ac.rs/images/stories/download/serbiaeu_ch2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Theodore H. Moran & Edward M. Graham & Magnus Blomstrom, 2005. "Does Foreign Direct Investment Promote Development?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3810, October.
    3. Klaus E. Meyer, 1998. "Direct Investment in Economies in Transition," Books, Edward Elgar Publishing, number 1413.
    4. Estrin, Saul & Bevan, Alan, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers.
    5. Alan A. Bevan & Saul Estrin, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," William Davidson Institute Working Papers Series 342, William Davidson Institute at the University of Michigan.
    6. Weijian Shan & Jaeyong Song, 1997. "Foreign Direct Investment and the Sourcing of Technological Advantage: Evidence from the Biotechnology Industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(2), pages 267-284, June.
    7. Doyle Eleanor, 2001. "Export-Output Causality and the Role of Exports in Irish Growth: 1950-1997," International Economic Journal, Taylor & Francis Journals, vol. 15(3), pages 31-54.
    8. Herzer, Dierk & Klasen, Stephan & Nowak-Lehmann D., Felicitas, 2008. "In search of FDI-led growth in developing countries: The way forward," Economic Modelling, Elsevier, vol. 25(5), pages 793-810, September.
    9. Sanjay Kathuria, 2008. "Western Balkan Integration and the EU : An Agenda for Trade and Growth," World Bank Publications - Books, The World Bank Group, number 6446, 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. Amir Fejzić, 2017. "Sectorial Composition Of Foreign Direct Investment And Growth: The Case Of The See-5," Ekonomske ideje i praksa, Faculty of Economics and Business, University of Belgrade, issue 24, pages 87-116, March.
    2. Uros Delevic & Irina Heim, 2017. "Institutions In Transition: Is The Eu Integration Process Relevant For Inward Fdi In Transition European Economies?," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 5(1), pages 16-32.

    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. Schwieren, C.A.A. & Vendrik, M.C.M. & de Gijsel, P.P., 2004. "The power of competition: reducing or reinforcing discrimination?," Research Memorandum 041, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. Radu CIOBANU & Robert-Aurelian ȘOVA & Adriana Florina POPA, 2020. "The Impact of FDI over Economic Growth and how COVID-19 Crisis Can Impact the CEE Economies," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 0(4), pages 64-72, April.
    3. Rami Hodrob, 2017. "The Impact of Foreign Direct Investment on Palestinian Economic Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 550-557.
    4. Jaap Bos & Mindel van de Laar, 2004. "Explaining Foreign Direct Investment in Central and Eastern Europe: an Extended Gravity Approach," DNB Working Papers 008, Netherlands Central Bank, Research Department.
    5. Radu CIOBANU & Robert-Aurelian ȘOVA & Adriana Florina POPA, 2020. "The Impact of FDI over Economic Growth and how COVID-19 Crisis Can Impact the CEE Economies," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 1(4), pages 64-72, April.
    6. Ponce, Aldo, 2010. "Foreign Direct Investment and Civil Rights: Testing Decreasing Returns to Civil Rights," MPRA Paper 22020, University Library of Munich, Germany.
    7. Nauro F. Campos & Yuko Kinoshita, 2002. "Foreign Direct Investment as Technology Transferred: Some Panel Evidence from the Transition Economies," Manchester School, University of Manchester, vol. 70(3), pages 398-419, June.
    8. Valentin Goev & Vesselin Mintchev & Tsvetomira Tsenova-Knudsen & Venelin Boshnakov, 2002. "Determinants of European Union Enterprises Relocation in Bulgaria," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 56-72.
    9. Wacker, Konstantin M. & Großkurth, Philipp & Lakemann, Tabea, 2014. "Terms of Trade, Foreign Direct Investment, and Development: A Case of Intra-Asian “Kicking Away the Ladder”?," Working Papers on Regional Economic Integration 122, Asian Development Bank.
    10. Rajneesh Narula & André Pineli, 2017. "Multinational Enterprises and Economic Development in Host Countries: What We Know and What We Don’t Know," Palgrave Studies in Impact Finance, in: Gianluigi Giorgioni (ed.), Development Finance, chapter 6, pages 147-188, Palgrave Macmillan.
    11. Alguacil, M. & Cuadros, A. & Orts, V., 2011. "Inward FDI and growth: The role of macroeconomic and institutional environment," Journal of Policy Modeling, Elsevier, vol. 33(3), pages 481-496, May.
    12. Adeel Ahmad DAR & Taj MUHAMMAD & M. Wasif SIDDIQI, 2020. "Bureaucratic Quality and FDI Inflows Nexus: A South Asian Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 149-168, September.
    13. repec:rdg:wpaper:em-dp2004-14 is not listed on IDEAS
    14. Jože Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
    15. Kamaras, Antonis, 2001. "A capitalist diaspora: the Greeks in the Balkans," LSE Research Online Documents on Economics 3327, London School of Economics and Political Science, LSE Library.
    16. Hanhee Lee, 2015. "Foreign Direct Investment In North Korea And The Effect Of Special Economic Zones: Learning From Transition Economies," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(2), pages 35-56, June.
    17. Johnson, Andreas, 2006. "FDI inflows to the Transition Economies in Eastern Europe: Magnitude and Determinants," Working Paper Series in Economics and Institutions of Innovation 59, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    18. Yuko Kinoshita & Nauro F. Campos, 2003. "Why Does Fdi Go Where it Goes? New Evidence From the Transition Economies," IMF Working Papers 2003/228, International Monetary Fund.
    19. Kinoshita, Yuko & Campos, Nauro F., 2004. "Estimating the determinants of foreign direct investment inflows : how important are sampling and omitted variable biases?," BOFIT Discussion Papers 10/2004, Bank of Finland, Institute for Economies in Transition.
    20. George Galanos & Thomas Poufinas, 2018. "Impact of FDI in the Fiscal Adjustment Process," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(3), pages 265-277, August.
    21. Akisik, Orhan & Gal, Graham & Mangaliso, Mzamo P., 2020. "IFRS, FDI, economic growth and human development: The experience of Anglophone and Francophone African countries," Emerging Markets Review, Elsevier, vol. 45(C).

    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:ibg:chaptr:srbeu-2. 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: Zorica Bozic (email available below). General contact details of provider: https://edirc.repec.org/data/ienbgyu.html .

    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.