A bi-directional relationship between FDI and economic reforms in ten Central European countries is tested, along with the role of the EU in breaking a potential vicious circle of insecurity, little investment, slow reforms, low prospects of EU membership and hence high insecurity. Using panel data regressions and a system of simultaneous equations, we find evidence that the prospect of EU membership has enhanced FDI in the less reformist candidates and that trade integration and increased EU financial assistance have improved FDI in the CEECs.
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Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number
0509.
Length: Date of creation: Nov 2005 Date of revision: Handle: RePEc:ukc:ukcedp:0509
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Find related papers by JEL classification: F2 - International Economics - - International Factor Movements and International Business C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
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