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FDI Determinants in the European Union: Empirical Application

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  • Alena Dorakh

Abstract

The purpose of this paper is to verify and estimate, besides gravity factors, the individual country specific determinants in influencing FDI inflows to the selected countries. More than standard factors, we revile additional factors, which could explain the investment in the EU. In this context, we take into account the neighboring effects as an important motive for FDI inflows last time. Our findings verify that efficiency-seeking and more complex form of the FDI determinants is more pronounced strategy now in the new EU member states than market-seeking FDI that is more relevant for the whole EU. Moreover, in addition to the existing literature, we argue that a variation in FDI determined by the EU-2004 enlargement started earlier than official date and remains its impact. Supposedly, a significant surrounding market potential could be for the new EU member states an evidence of the complex vertical FDI determinant today. JEL Codes - F21; F23; O52

Suggested Citation

  • Alena Dorakh, 2020. "FDI Determinants in the European Union: Empirical Application," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 67(2), pages 220-233, June.
    • Handle: RePEc:aic:saebjn:v:67:y:2020:i:2:p:220-233:n:12
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    References listed on IDEAS

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    1. Uwaoma G. Nwaogu & Michael Ryan, 2014. "Spatial Interdependence in US Outward FDI into Africa, Latin America and the Caribbean," The World Economy, Wiley Blackwell, vol. 37(9), pages 1267-1289, September.
    2. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    3. Andrzej Cieślik, 2017. "Determinants of MNE Activity in Poland: The Case of Firms from EU-15," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 5(1), pages 151-167.
    4. Paola Cardamone & Margherita Scoppola, 2012. "The Impact of EU Preferential Trade Agreements on Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 35(11), pages 1473-1501, November.
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    Cited by:

    1. Camarero, Mariam & Moliner, Sergi & Tamarit, Cecilio, 2024. "A Fresh Assessment of the Depth of the “Euro Effect" on US FDI," Single Market Economics Papers WP2024/18, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.

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    More about this item

    Keywords

    foreign direct investment; the new EU member states; country-specific determinants of FDI; panel data; fixed effects; neighboring effects;
    All these keywords.

    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
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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