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Foreign direct investment in the Western Balkans: what role has it played during transition?

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  • Estrin, Saul
  • Uvalic, Milica

Abstract

The paper explores the impact of foreign direct investment (FDI) on the economies of the Western Balkans during their transition to a market system. The paper recalls the political and historical circumstances that have delayed transition in the Western Balkans economies, and draws attention to the specific features of FDI that have influenced their economic development. The main hypotheses are formulated and basic tests performed on data from the manufacturing sector. However, data limitations mean that we can only test for horizontal, rather than vertical, spillovers and in practice we are not able to identify many significant horizontal spillover effects. This finding can probably be explained by various factors – institutional, economic and political – that have constrained FDI effects in the Western Balkan economies in comparison with the Central East European countries. Our work has important policy implications; in order to accelerate economic development, Western Balkan policymakers may need to implement more effective economic policies.

Suggested Citation

  • Estrin, Saul & Uvalic, Milica, 2016. "Foreign direct investment in the Western Balkans: what role has it played during transition?," LSE Research Online Documents on Economics 67004, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:67004
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    File URL: http://eprints.lse.ac.uk/67004/
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    2. Luca J. Uberti, 2020. "Bribes, Rents and Industrial Firm Performance in Albania and Kosovo," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(2), pages 263-302, June.
    3. Milica Uvalić & Božidar Cerović† & Jasna Atanasijević, 2020. "The Serbian Economy Ten Years After The Global Economic Crisis," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(225), pages 33-72, April – J.
    4. Peter Howard-Jones & Jens Hölscher & Dragana Radicic, 2017. "Firm Productivity In The Western Balkans: The Impact Of European Union Membership And Access To Finance," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 62(215), pages 7-52, October –.
    5. Oltiana Muharremi, 2020. "Discussion: Challenges and Recent Developments of Foreign Direct Investments in Albania and Western Balkan Countries," Central European Business Review, Prague University of Economics and Business, vol. 2020(4), pages 96-111.
    6. Enika Abazi, 2021. "Geopolitics in the Western Balkans: linkages, leverages and gatekeepers," Academicus International Scientific Journal, Entrepreneurship Training Center Albania, issue 24, pages 85-108, July.
    7. Nebojsa Stojcic & Zoran Aralica, 2017. "Choosing Right from Wrong: Industrial Policy and (De)industrialization in Central and Eastern Europe," Working Papers 1703, The Institute of Economics, Zagreb.
    8. Peter Howard-Jones & Jens Hölscher, 2020. "The Influence Of The Washington Consensus Programme On The Transitional Economies Of Eastern Europe – A Firm-Level Analysis," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 65(226), pages 9-44, July – Se.
    9. Krasniqi, Besnik & Ahmetbasić, Jasmina & Bartlett, Will, 2022. "Foreign direct investment and backward spillovers in the Western Balkans: the context, opportunities and barriers to the development of regional supply chains," LSE Research Online Documents on Economics 115391, London School of Economics and Political Science, LSE Library.
    10. Ivana Durovic, 2017. "The effects of intercompany lending on the current account balances of selected economies in the Western Balkans," Public Sector Economics, Institute of Public Finance, vol. 41(4), pages 421-441.
    11. Özcan Karahan & Olcay Çolak, 2021. "Foreign Direct Investment and Productivity Growth in Eastern European Countries," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 14(3), pages 26-34, December.

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    More about this item

    Keywords

    foreign direct investment; Balkans; transition; spillover effects;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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