IDEAS home Printed from https://ideas.repec.org/a/taf/jbemgt/v12y2011i3p435-450.html
   My bibliography  Save this article

Government incentives directed towards foreign direct investment: a case of central and eastern europe

Author

Listed:
  • Romualdas Ginevičius
  • Agnė Šimelytė

Abstract

This article examines the government incentives towards foreign direct investments (further -- FDI) of Central and Eastern Europe countries by evaluating the external influencing factors of foreign investment. It is argued that the major incentive affecting FDI inflows involves more fiscal than financial incentives. Tax deduction is considered to be the most significant influencing factor on attracting FDI. Hence, the empirical analysis is based on exogenous variables. The empirical model was used to determine causal relationship between macroeconomic variables and FDI intensity in Central and Eastern European countries. The article introduces some policy recommendation for the increase of FDI intensity in Central and Eastern Europe.

Suggested Citation

  • Romualdas Ginevičius & Agnė Šimelytė, 2011. "Government incentives directed towards foreign direct investment: a case of central and eastern europe," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 12(3), pages 435-450, May.
    • Handle: RePEc:taf:jbemgt:v:12:y:2011:i:3:p:435-450
    DOI: 10.3846/16111699.2011.599415
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.3846/16111699.2011.599415
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.3846/16111699.2011.599415?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vidya Mahambare & V. N. Balasubramanyam, 2005. "FDI in India," International Trade 0505007, University Library of Munich, Germany.
    2. Barros, Pedro P & Cabral, Luis, 2000. "Competing for Foreign Direct Investment," Review of International Economics, Wiley Blackwell, vol. 8(2), pages 360-371, May.
    3. Peter J. Buckley & Frances Ruane, 2010. "Foreign Direct Investment in Ireland: Policy Implications for Emerging Economies," Palgrave Macmillan Books, in: Foreign Direct Investment, China and the World Economy, chapter 16, pages 365-385, Palgrave Macmillan.
    4. Saggi, Kamal, 1999. "Foreign Direct Investment, Licensing, and Incentives for Innovation," Review of International Economics, Wiley Blackwell, vol. 7(4), pages 699-714, November.
    5. Austan Goolsbee, 1997. "Investment Tax Incentives, Prices, and the Supply of Capital Goods," NBER Working Papers 6192, National Bureau of Economic Research, Inc.
    6. Demekas, Dimitri G. & Horvath, Balazs & Ribakova, Elina & Wu, Yi, 2007. "Foreign direct investment in European transition economies--The role of policies," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 369-386, June.
    7. Lim, Sung-Hoon, 2008. "How investment promotion affects attracting foreign direct investment: Analytical argument and empirical analyses," International Business Review, Elsevier, vol. 17(1), pages 39-53, February.
    8. dumludag, devrim, 2007. "An analysis of the determinants of foreign direct investment in Turkey: the role of the institutional context," MPRA Paper 32060, University Library of Munich, Germany, revised Feb 2008.
    9. Kaz Miyagiwa & Yuka Ohno, 2009. "Multinationals, Tax Holidays, And Technology Transfer," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 82-96, March.
    10. Head, C. Keith & Ries, John C. & Swenson, Deborah L., 1999. "Attracting foreign manufacturing: Investment promotion and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 197-218, March.
    11. M. Rosenboim & I. Luski & T. Shavit, 2008. "Behavioral approaches to optimal FDI incentives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 601-607.
    12. Tomáš HAVRà NEK & Zuzana IRÅ OVÃ, 2010. "On the Intensity of International Subsidy Competition for FDI," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 2(2(543)), pages 25-54, February.
    13. Florence Hubert & Nigel Pain, 2002. "Fiscal Incentives, European Integration and the Location of Foreign Direct Investment," Manchester School, University of Manchester, vol. 70(3), pages 336-363, June.
    14. Jai Mah & Donatas Tamulaitis, 2000. "A Note on Investment Incentives in the WTO and the Transition Economies," Post-Communist Economies, Taylor & Francis Journals, vol. 12(1), pages 119-130.
    15. Hubert, Florence & Pain, Nigel, 2002. "Fiscal Incentives, European Integration and the Location of Foreign Direct Investment," Manchester School, University of Manchester, vol. 70(3), pages 336-363, June.
    16. Eric Rugraff, 2008. "Are the FDI policies of the Central European countries efficient?," Post-Communist Economies, Taylor & Francis Journals, vol. 20(3), pages 303-316.
    17. Cardarelli, Roberto & Sefton, James & Kotlikoff, Laurence J, 2000. "Generational Accounting in the UK," Economic Journal, Royal Economic Society, vol. 110(467), pages 547-574, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Magdalena Owczarczuk, 2013. "Government Incentives and FDI inflow into R&D – The Case of Visegrad Countries," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 1(2), pages 73-86.
    2. Peter Vaz da Fonseca & Michele Nascimento Juca, 2020. "The Influence of Taxes on Foreign Direct Investment: Systematic Literature Review and Bibliometric Analysis," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 55-77.
    3. Menna, Khaled & Mehibel, Samer, 2018. "Les pays de l’Afrique du Nord et les IDE face à la problématique de l’attractivité [North African countries and FDI facing the issue of attractiveness]," MPRA Paper 85559, University Library of Munich, Germany.
    4. Blomström, Magnus & Kokko, Ari, 2003. "The Economics of Foreign Direct Investment Incentives," EIJS Working Paper Series 168, Stockholm School of Economics, The European Institute of Japanese Studies.
    5. Jonathan Jones, 2017. "Agglomeration economies and the location of foreign direct investment: A meta-analysis," Journal of Regional Science, Wiley Blackwell, vol. 57(5), pages 731-757, November.
    6. Basile, Roberto & Castellani, Davide & Zanfei, Antonello, 2008. "Location choices of multinational firms in Europe: The role of EU cohesion policy," Journal of International Economics, Elsevier, vol. 74(2), pages 328-340, March.
    7. Görg, Holger, 2002. "Fancy a Stay at the 'Hotel California'? Foreign Direct Investment, Taxation and Firing Costs," IZA Discussion Papers 665, Institute of Labor Economics (IZA).
    8. Holger Görg, 2003. "Foreign direct investment, investment incentives, and firing costs: A disadvantage for "inflexible Europe"?," European Economy Group Working Papers 30, European Economy Group.
    9. Gross, Dominique M. & Ryan, Michael, 2008. "FDI location and size: Does employment protection legislation matter?," Regional Science and Urban Economics, Elsevier, vol. 38(6), pages 590-605, November.
    10. Clampit, Jack & Gaffney, Nolan & Fabian, Frances & Stafford, Thomas, 2023. "Institutional misalignment and escape-based FDI: A prospect theory lens," International Business Review, Elsevier, vol. 32(3).
    11. Martin Bohl & Frank McDonald & Heinz-Josef Tuselmann & Svitlana Voronkova & Paul Windrum, 2011. "The German model of capitalism and the persistence of outward foreign direct investment: evidence from German manufacturing industries," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 119-125.
    12. Anderson, John & Sutherland, Dylan, 2015. "Developed economy investment promotion agencies and emerging market foreign direct investment: The case of Chinese FDI in Canada," Journal of World Business, Elsevier, vol. 50(4), pages 815-825.
    13. Rougé Jean-François & Chopov Borislav, 2016. "Hypercompetition & Fiscal Attractiveness," Economics, Sciendo, vol. 4(2), pages 75-93, December.
    14. Peter Bolcha, 2008. "O výpočte fiškálneho dopadu investičnej podpory [On calculus of fiscal impact of investment incentives]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(2), pages 257-274.
    15. Renz, André, 2016. "Die Relevanz von Replikationen in der experimentellen Steuerforschung: Eine Replikationsstudie zu Wahrnehmungsverzerrungen bei Subventionen," arqus Discussion Papers in Quantitative Tax Research 202, arqus - Arbeitskreis Quantitative Steuerlehre.
    16. Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment – A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, February.
    17. Van, Johannes Biesebroeck, 2008. "Policy Watch: Governments at the Bidding Table," Working Paper Series 3981, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    18. Nalin Kumar Ramaul & Pinki Ramaul, 2016. "Determinants of Industrial Location Choice in India: A Polychoric Principal Component Analysis Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(1), pages 29-56, June.
    19. C. Dembour, 2008. "Competition for Business Location: A Survey," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 89-111, June.
    20. Adelaide Baronchelli & Teodora Erika Uberti, 2021. "International Economic Integration: Comparing Exports and FDI Networks in the New Millennium," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 13(11), pages 1-30, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jbemgt:v:12:y:2011:i:3:p:435-450. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TBEM20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.