FDI in Small Countries: the Baltic States
AbstractAnalysing 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 telecommunications, contributing to increasing efficiency in the whole economy.
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Bibliographic InfoPaper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Research Reports with number 307.
Length: 23 pages including 3 Table and 8 Figures
Date of creation: Jun 2004
Date of revision:
Publication status: Published as wiiw Research Report
Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Business, and Aid
- O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
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- World Bank, 2005. "Lithuania : Investment Climate Assessment," World Bank Other Operational Studies 8568, The World Bank.
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