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The dark side of landlockedness: Examining the determinants of foreign direct investment flows in transition economies

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  • Ikboljon Kasimov, Hayot Berk Saydaliev, Lu Wencong

Abstract

This study investigates the determinants of FDI to 12 transition economies in the Commonwealth of Independent States (CIS) by incorporating the market, institutional, and geographic factors, using panel data from 2002 to 2020. We analyze whether and how these factors differ across regions based on country-specific geographic location characteristics. The results of the Prais-Winsten regression with panel-corrected standard errors (PCSEs) show that market size, trade openness, natural resources, institutional quality, and sea access are positively associated with FDI. On the contrary, external debt and landlockedness deter FDI, but the adverse effect of landlockedness may be neutralized by sea access.

Suggested Citation

  • Ikboljon Kasimov, Hayot Berk Saydaliev, Lu Wencong, 2024. "The dark side of landlockedness: Examining the determinants of foreign direct investment flows in transition economies," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 21(1), pages 35-63, June.
    • Handle: RePEc:liu:liucej:v:21:y:2024:i:1:p:35-63
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    More about this item

    Keywords

    Foreign direct investment; Economic freedom; Landlocked; Sea-access; Transition economies;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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