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Determinants of FDI Stock in Some Central European Countries

Author

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  • Popescu Liviu

    (Department of Statistics and Economic Informatics, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Brostescu Simina

    (Department of Statistics and Economic Informatics, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Sitnikov Catalina

    (Department of Management, Marketing and Business Administration, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

  • Vasilescu Laura

    (Department of Finances, Faculty of Economics and Business Administration, University of Craiova, 200585 Craiova, Romania)

Abstract

Given the importance of foreign direct investment (FDI) in the economy, the purpose of this study is to identify and investigate the economic indicators that can explain the development of FDI in the economies of Central and Eastern European countries such as the Czech Republic, Poland, Hungary, and Slovenia throughout the period 1995–2020. When developing multiple linear regression models, the following explanatory variables were considered: exports, imports, import concentration and diversification indices, the balance of trade, the balance of payments, and different components of the economic freedom index. Therefore, it was shown that a rise in exports and imports has a beneficial impact on enhancing the flow of foreign direct investment (FDI) in each of the nations examined for this study. Furthermore, an increase in the value of the import diversification index is shown to have a beneficial effect on the levels of foreign direct investment (FDI) in the Czech Republic, Hungary, and Slovenia, as determined by this study. On the other hand, the import concentration index has been shown to benefit foreign direct investment in Poland. Furthermore, it was discovered that the balance of payments was a positive factor in the Hungarian economy. In contrast, the trade balance was shown to be a positive element in Poland and Slovenia. Both indicators have positively impacted foreign direct investment (FDI) flow.

Suggested Citation

  • Popescu Liviu & Brostescu Simina & Sitnikov Catalina & Vasilescu Laura, 2023. "Determinants of FDI Stock in Some Central European Countries," JRFM, MDPI, vol. 16(3), pages 1-31, March.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:3:p:164-:d:1084831
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    References listed on IDEAS

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