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Foreign Direct Investments as Initiators of Change: The ”Swedmilk” dairy case- Reasons behind the failure

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  • Tuna, Emelj

Abstract

Institutional problems and the corruptive use of social capital give ground for misuse of institutional gaps and cause intentional failures for financial benefits. Based on social capital theory and transaction cost economics (TCE) this paper describes how the institutional environment in the Former Yugoslav Republic of Macedonia (FYROM), affects success or failure of business endeavors, such as the Swedmilk case. Foreign Direct Investments (FDI’s) are expected to be the drivers of positive economic development for economies in transition. Hence, the major question addressed in this paper is: How does a Greenfield foreign direct investment of 25 million Euros, manage to collapse in such a short period? The paper also describes the “official” plans and actual outcomes of the dairy, as well as the situation in the dairy sector before and after the Swedmilk failure. The financial problems occurred in October 2008, so the case of Swedmilk is quite recent and has not been included in any kind of research. Being a recent case the real implications on the dairy farming and sector are yet to be explored.

Suggested Citation

  • Tuna, Emelj, 2011. "Foreign Direct Investments as Initiators of Change: The ”Swedmilk” dairy case- Reasons behind the failure," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116092, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae11:116092
    DOI: 10.22004/ag.econ.116092
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    References listed on IDEAS

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    1. Mark Granovetter, 2005. "The Impact of Social Structure on Economic Outcomes," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 33-50, Winter.
    2. Svendsen, Gert Tinggaard, 2003. "Social Capital, Corruption and Economic Growth: Eastern and Western Europe," Working Papers 03-21, University of Aarhus, Aarhus School of Business, Department of Economics.
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