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Foreign Direct Investment in Southeastern Europe

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Author Info

  • Elina Ribakova
  • Balázs Horváth
  • Dimitri G. Demekas
  • Yi Wu

Abstract

Gravity factors explain a large part of Foreign Direct Investment (FDI) inflows in Southeastern Europe-a region not comprehensively covered before in econometric studies-but hostcountry policies also matter. Key are policies that affect relative unit labor costs, the corporate tax burden, infrastructure, and the trade regime. This paper develops the concept of potential FDI for each country, and uses its deviation from actual levels to estimate what policies can realistically be expected to achieve in terms of additional FDI. It also finds evidence that above a certain threshold, the importance of some policies for attracting FDI is distinctly different.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 05/110.

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Length: 31
Date of creation: 01 Jun 2005
Date of revision:
Handle: RePEc:imf:imfwpa:05/110

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Keywords: Foreign direct investment; Transition economies; fdi; direct investment; host country; foreign investment; foreign investors; investors; foreign exchange; host countries; tax incentives; income tax rate; tax rate; market size; corporate tax burden; corporate tax; foreign companies; international investors; foreign ? investment; multinational firms; tax policy; institutional development; international investment; investment decisions; international trade; multinational enterprises; industrial economies; commercial disputes; bilateral investment; host economy; direct investment statistics; technology transfer; tax relief; macroeconomic stability; accelerated depreciation; foreign-owned firms; corporate taxes; host-country; investment environment; tax regime; economic zones; special economic zones; multinational companies; bilateral investment treaties;

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References

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  1. Alexander Lehmann & Ashoka Mody, 2004. "International Dividend Repatriations," IMF Working Papers 04/5, International Monetary Fund.
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Citations

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Cited by:
  1. Igor Stokovic & Lorena Skuflic, 2006. "Transition Process in South Eastern Europe Compared to the Central European Transition Countries," ERSA conference papers ersa06p92, European Regional Science Association.
  2. David Moore & Athanasios Vamvakidis, 2008. "Economic Growth in Croatia: Potential and Constraints," Financial Theory and Practice, Institute of Public Finance, vol. 32(1), pages 1-28.
  3. Saul Estrin & Milica Uvalic, 2013. "Foreign direct investment into transition economies: are the Balkans different?," LSE Research Online Documents on Economics 53180, London School of Economics and Political Science, LSE Library.
  4. Erik Lueth & Marta Ruiz-Arranz, 2006. "A Gravity Model of Workers' Remittances," IMF Working Papers 06/290, International Monetary Fund.
  5. 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.
  6. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human development: an economic perspective applied to the transitional countries of Europe and CIS," MPRA Paper 9171, University Library of Munich, Germany.
  7. Triandafil, Cristina Maria, 2011. "The Analysis Of The Convergence Criteria. Empirical Perspective In The Context Of The Sustainable Character Highlight," Working Papers of National Institute of Economic Research 111205, National Institute of Economic Research.
  8. Saul Estrin & Milica Uvalic, 2013. "Foreign direct investment into transition economies: Are the Balkans different?," Europe in Question Discussion Paper Series of the London School of Economics (LEQs) 4, London School of Economics / European Institute.
  9. Marian Dinga, 2008. "The Impact of Territorially Concentraced FDI on Local Labor Markets: Evidence from the Czech Republic," CERGE-EI Working Papers wp348, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  10. Elif Arbatli, 2011. "Economic Policies and FDI Inflows to Emerging Market Economies," IMF Working Papers 11/192, International Monetary Fund.
  11. Athanasios Vamvakidis, 2008. "Convergence in Emerging Europe," IMF Working Papers 08/181, International Monetary Fund.
  12. Bassem Kahouli & Anis Omri & Anissa Chaibi, 2014. "Environmental Regulations, Trade, and Foreign Direct Investment: Evidence from Gravity Equations," Working Papers 2014-189, Department of Research, Ipag Business School.
  13. Kardos Mihaela, 2008. "Evolution And Perspectives Of Foreign Direct Investment In Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 115-119, May.
  14. David Moore & Athanasios Vamvakidis, 2007. "Economic Growth in Croatia," IMF Working Papers 07/198, International Monetary Fund.
  15. Kalaj, Ermira Hoxha, 2010. "Remittances and Human Capital Investment: Evidence from Albania," MPRA Paper 49210, University Library of Munich, Germany.
  16. Dinga, Marián & Münich, Daniel, 2010. "The impact of territorially concentrated FDI on local labor markets: Evidence from the Czech Republic," Labour Economics, Elsevier, vol. 17(2), pages 354-367, April.
  17. Saul Estrin & Milica Uvalic, 2013. "Foreign direct investment into transition economies: Are the Balkans different?," LEQS – LSE 'Europe in Question' Discussion Paper Series 64, European Institute, LSE.
  18. Heather D. Gibson & Nicholas T. Tsaveas & Thomas Vlassopoulos, 2006. "Capital Flows, Capital Account Liberalisation and the Mediterranean Countries," Working Papers 33, Bank of Greece.
  19. Marcin Piatkowski & Mariusz Jarmuzek, 2008. "Zero Corporate Income Tax in Moldova," IMF Working Papers 08/203, International Monetary Fund.
  20. Besim Culahovic & Eldin Mehic & Emir Agic, 2010. "Foreign Direct Investment Location And Institutional Development In In The Manufacturing Sector In South East European Countries," Interdisciplinary Management Research, Faculty of Economics in Osijek, Croatia, vol. 6, pages 365-380.
  21. Sõrg, Mart, 2007. "Estonia's high current account deficit has special reasons," Wirtschaftswissenschaftliche Diskussionspapiere 13/2007, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.
  22. Malgorzata Jakubiak & Alina Kudina, 2008. "The Motives and Impediments to FDI in the CIS," CASE Network Studies and Analyses 0370, CASE-Center for Social and Economic Research.
  23. Iskra Christova-Balkanska, 2009. "Foreign Direct Investments in Bulgaria: Do They Have an Effect on the Economic Development of the Country?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 197-213.
  24. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human developement : an economic perspective applied to transitional countries of Europe and CIS," MPRA Paper 9235, University Library of Munich, Germany.

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