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Attracting foreign direct investment: the public policy scope for South East European countries

Author

Listed:
  • Christian BELLAK

    (Vienna University of Economics and Business Administration)

  • Markus LEIBRECHT

    (Vienna University of Economics and Business Administration)

  • Mario LIEBENSTEINER

    (Vienna University of Economics and Business Administration)

Abstract

Based on earlier empirical literature for Central and Eastern European Countries this paper attempts to analyze the likely impact of changes in corporate income taxes, in the endowment with production-related material infrastructure and in the institutional environment on Foreign Direct Investment (FDI) – and thus on one channel of regional development in South Eastern European Countries (SEECs). Specifically, we explore the scope for public policy to attract FDI separated by these three policy areas and across the SEECs. Our findings suggest that the potential for SEECs to attract FDI upon changes in these policy areas varies not only substantially between the three policy areas but also within the group of SEECs. Yet, as a general picture, most SEECs have substantial scope to attract FDI by improving their institutional environment as well as their infrastructure endowment. The tax instrument, in contrast, is largely exhausted as a means to attract FDI. Based on these findings some medium- and long-term policy issues are outlined.

Suggested Citation

  • Christian BELLAK & Markus LEIBRECHT & Mario LIEBENSTEINER, 2010. "Attracting foreign direct investment: the public policy scope for South East European countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 1, pages 37-53, December.
    • Handle: RePEc:jes:journl:y:2010:v:1:p:37-53
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    File URL: http://ejes.uaic.ro/articles/EJES2010_0102_BEL.pdf
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    References listed on IDEAS

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    1. Agnès Bénassy‐Quéré & Maylis Coupet & Thierry Mayer, 2007. "Institutional Determinants of Foreign Direct Investment," The World Economy, Wiley Blackwell, vol. 30(5), pages 764-782, May.
    2. Ruud A. de Mooij & Sjef Ederveen, 2008. "Corporate tax elasticities: a reader's guide to empirical findings," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(4), pages 680-697, winter.
    3. Chong Ju Choi & Carla C. J. M. Millar & Caroline Y. L. Wong, 2005. "Knowledge and the State," Palgrave Macmillan Books, in: Knowledge Entanglements, chapter 0, pages 19-38, Palgrave Macmillan.
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    Cited by:

    1. Sabina Silajdzic & Eldin Mehic, 2022. "How Effective Is Tax Policy in Attracting Foreign Direct Investments in Transition Countries?," Central European Business Review, Prague University of Economics and Business, vol. 2022(1), pages 19-39.
    2. Gabor Hunya, 2014. "Regional Policy and FDI Location – an Overview of the Larger New EU Member States," wiiw Research Reports 393, The Vienna Institute for International Economic Studies, wiiw.
    3. Popovici Oana Cristina & Calin Adrian Cantemir, 2012. "Attractiveness Of Public Policies For Fdi In Central And Eastern European Countries," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 61-67, July.
    4. FOTIA Alexandru & TECLEAN Cezar, 2018. "The Impact of Intermodal Connectivity of Transport Networks on Net Exports in the European Union Member States," European Journal of Interdisciplinary Studies, Bucharest Economic Academy, issue 01, March.
    5. Fabian J. Baier, 2020. "Foreign Direct Investment and Tax: OECD Gravity Modelling in a World with International Financial Institutions," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 6(1), pages 45-72, October.
    6. Fabian J. Baier, 2019. "Foreign Direct Investment and Tax: OECD Gravity Modelling in a World with International Financial Institutions," EIIW Discussion paper disbei261, Universitätsbibliothek Wuppertal, University Library.

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