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Does the Foreign Direct Investment Enhance Digital Readiness?

Author

Listed:
  • Darmo Ľubomír

    (Associate Professor University of Economics in Bratislava, Faculty of Economics and Finance Dolnozemská cesta 1, 852 35 Bratislava, Slovakia)

  • Ognjanović Ivana

    (PhD. Associate Professor University of Donja Gorica, Montenegro)

Abstract

Paper focuses on studying the role of foreign direct investment in improving technology and digitalization in central and southeast European countries. Frontier technology readiness index is a measure which is positively affected by investment. Apart from the foreign direct investment, 12 variables are used in panel regression analysis. The variables represent different areas, such as the performance of the economy, international trade, labour, education, research and digital infrastructure. The data used consist of 17 cross-sectional units – countries from central and southeast Europe and 12 time series – period 2008-2019 for which the Index is available. The result indicates that the FDI inflow has positive and statistically significant effect on the score of the Index. It means that the higher the FDI inflows to a country, the higher the Index score. In other words, foreign direct investment might be considered as the factor enhancing the digitalization, technology improvement and country readiness to use, adopt or adapt advanced technologies. The result confirms the technological spill-over effect of foreign direct investment to host economy.

Suggested Citation

  • Darmo Ľubomír & Ognjanović Ivana, 2025. "Does the Foreign Direct Investment Enhance Digital Readiness?," South East European Journal of Economics and Business, Sciendo, vol. 20(1), pages 100-112.
    • Handle: RePEc:vrs:seejeb:v:20:y:2025:i:1:p:100-112:n:1008
    DOI: 10.2478/jeb-2025-0008
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    More about this item

    Keywords

    digitalization; Frontier Technology Readiness Index; foreign direct investment; central and southeast Europe;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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