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The CEECs as FDI attractors: are they a menace to the EU periphery?

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  • Aurora Galego

    (Department of Economics, University of Évora)

  • Isabel Vieira

    (Department of Economics, University of Évora)

  • Carlos Vieira

    (Department of Economics, University of Évora)

Abstract

The change of economic, social and political orientation in Central and Eastern European countries (CEEC), together with their expressed intention of joining the European Union (EU) in a foreseeable future, have 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), which is considered 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 labour suppliers such as Portugal in particular, since there are reasons to believe that ?the east may be getting what would otherwise come south?.

Suggested Citation

  • Aurora Galego & Isabel Vieira & Carlos Vieira, 2003. "The CEECs as FDI attractors: are they a menace to the EU periphery?," Economics Working Papers 4_2003, University of Évora, Department of Economics (Portugal).
    • Handle: RePEc:evo:wpecon:4_2003
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    File URL: http://hdl.handle.net/10174/8400
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    References listed on IDEAS

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    1. Lansbury, Melanie & Pain, Nigel & Smidkova, Katerina, 1996. "Foreign Direct Investment in Central Europe Since 1990: An Econometric Study," National Institute Economic Review, National Institute of Economic and Social Research, vol. 156, pages 104-114, May.
    2. Piazolo, Daniel & Kokta, Robert M. & Buch, Claudia M., 2001. "Does the East Get What Would Otherwise Flow to the South? FDI Diversion in Europe," Kiel Working Papers 1061, Kiel Institute for the World Economy (IfW Kiel).
    3. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 12(24), pages 125-176.
    4. Paul Brenton & Francesca Di Mauro & Matthias Lücke, 2014. "Economic Integration and FDI: An Empirical Analysis off Foreign Investment in the EU and in Central and Eastern Europe," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 7, pages 125-151, World Scientific Publishing Co. Pte. Ltd..
    5. repec:sae:niesru:v:156:y::i:1:p:104-114 is not listed on IDEAS
    6. Laura Resmini, 2000. "The Determinants of Foreign Direct Investment in the CEECs: New evidence from sectoral patterns," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 665-689, November.
    7. Hans‐Peter Lankes & A. J. Venables, 1996. "Foreign direct investment in economic transition: the changing pattern of investments," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 331-347, October.
    8. Nigel Pain & Dawn Holland, 1998. "The Diffusion Of Innovations In Central And Eastern Europe: A Study Of The Determinants And Impact O," National Institute of Economic and Social Research (NIESR) Discussion Papers 137, National Institute of Economic and Social Research.
    9. Brenton, Paul & Di Mauro, Francesca, 1999. "The Potential Magnitude and Impact of FDI flows to CEECs," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 59-74.
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    Cited by:

    1. Palmero, Alfredo Jiménez & Herrera, Juan José Durán & Sabaté, Juan Manuel de la Fuente, 2013. "The role of psychic distance stimuli on the East-West FDI location structure in the EU. Evidence from Spanish MNEs," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 18(1), pages 36-65.

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