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The Effects of Transition and Political Instability On Foreign Direct Investment Inflows: Central Europe and the Balkans

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Author Info
Josef C. Brada ()
Ali M. Kutan
Taner M. Yigit

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Abstract

This paper examines the effect of transition and of political instability on FDI flows to the transition economies of Central Europe, the Baltics and the Balkans. We find that FDI to transition economies unaffected by conflict and political instability exceed those that would be expected for comparable West European countries. Success with stabilization and reform tends to increase FDI inflows. In the case of Balkan counties, conflict and instability have reduced FDI inflows below what one would expect for comparable West European countries, and reform and stabilization failures have further reduced FDI to the region. Thus the economic costs of instability in the Balkans have been quite high.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number wp729.

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Date of creation: 01 Nov 2004
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Handle: RePEc:wdi:papers:2004-729

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Keywords: foreign direct investment; transition; political instability; political risk;

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Find related papers by JEL classification:
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
P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  25. repec:fth:coluec:625 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. M. Uður Karakaplan & Bilin Neyaptý & Selin Sayek, 2005. "Aid and Foreign Direct Investment : International Evidence," Departmental Working Papers 0505, Bilkent University, Department of Economics. [Downloadable!]
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