Hunya, Gabor () (Vienna Institute for International Economic Studies)
Abstract
Analysing the evolution and determinants of foreign direct investment (FDI) in Estonia, Latvia and Lithuania, this paper argues that sound economic policies have created an environment conducive for FDI. Overall, FDI has contributed to economic growth in the Baltic economies, having financed around one-fifth of fixed investment. However, their small size makes the Baltic countries relatively less attractive for market-seeking FDI in manufacturing. Moreover, at the outset of transition, their economies were dominated by relatively uncompetitive low-technology industries, which made them less interesting for manufacturing-based export-oriented FDI. Thus, FDI largely went to relatively low-technology sectors, such as wood processing and food, and it has not helped radically transform the structure of the manufacturing sector. A major part of FDI went into services, including banking and telecommunication, contributing to increasing efficiency in the whole economy.
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Publisher Info
Paper provided by European Investment Bank, Economic and Financial Studies in its series EIB Papers with number
9/2004.
Find related papers by JEL classification: F15 - International Economics - - Trade - - - Economic Integration F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
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