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The Future Of Fdi In South Eastern European Countries: Messages From New Eu Member States


  • Slavica Penev
  • Matija Rojec


This paper looks at the interlinking of inward FDI, EU accession, and transition-related structural reform processes, and identifies the largest lags of SEE-6 countries in EU accession and transition processes, whose removal would have a positive impact on inward FDI. The analysis is based on EBRD Transition Indicators, the World Bank Doing Business Index, and the World Bank Governance Index. We find an obvious correlation of inward FDI, transition, and EU accession processes of NMS-10 countries and claim that SEE-6 countries will broadly follow the same pattern: their relative position as FDI recipients will gradually improve along with the progress of EU accession and transition processes. The analysis identifies the following main gaps of the SEE-6 in these processes: (i) in terms of economic system development - enterprise restructuring and governance, and sectoral reforms in energy, infrastructure, capital markets, and private equity; (ii) in terms of the governance of economy and society at large - regulatory quality and rule of law; and (iii) in terms of the business environment - dealing with construction permits, enforcing contracts, and registering property. Progress in narrowing down these gaps would mean a step forward in EU accession and transition, and consequently an improvement of SEE-6 countries’ positions as locations for inward FDI.

Suggested Citation

  • Slavica Penev & Matija Rojec, 2014. "The Future Of Fdi In South Eastern European Countries: Messages From New Eu Member States," Economic Annals, Faculty of Economics, University of Belgrade, vol. 59(202), pages 43-68, July – Se.
  • Handle: RePEc:beo:journl:v:59:y:2014:i:202:p:43-68

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    References listed on IDEAS

    1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 1-37.
    2. Andreas Breitenfellner & Jesus Crespo Cuaresma & Peter Mooslechner & Doris Ritzberger-Grünwald, 2008. "The Impact of EU Enlargement in 2004 and 2007 on FDI and Migration Flows Gravity Analysis of Factor Mobility," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 101-120.
    3. Kaminski, Bartlomiej, 2001. "How accession to the European Union has affected external trade and foreign direct investment in Central European economies," Policy Research Working Paper Series 2578, The World Bank.
    4. repec:hrv:faseco:30747190 is not listed on IDEAS
    5. Hakan Gungor & Ayla Ogus Binatli, 2010. "The Effect of European Accession Prospects on Foreign Direct Investment Flows," Working Papers 1006, Izmir University of Economics.
    6. Bevan, Alan A. & Estrin, Saul, 2004. "The determinants of foreign direct investment into European transition economies," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 775-787, December.
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    1. repec:jes:journl:y:2017:v:8:p:147-165 is not listed on IDEAS

    More about this item


    Foreign direct investment; transition process; EU accession process transition countries;

    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
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General


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