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FDI in the New European Neighbours of Southern Europe: a quest of institutions-based attractiveness

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  • Fabry, Nathalie
  • Zeghni, Sylvain

Abstract

Why the “New European Neighbours” at the South East of Europe, after more than 10 years of transition and European Neighbourhood Policy (ENP), are not sufficiently attractive for inward Foreign Direct Investment (FDI)? The experience of Central and Eastern European Countries has shown that the access to the EU membership can be positively pushed by the European Neighborhood Policy and inward-FDI. On the one hand, ENP can be a supportive framework for improving the investor’s confidence. ENP Instruments can add more coherence in technical assistance; provide more financial support for creating capacities for trade, improve infrastructures, and contribute to the institutional and private sector development. On the other hand, inward-FDI may help to achieve modernization, industrial upgrading and improve productivity by importing foreign technologies, diffusing knowledge and western best practices. Southern European Transition Countries lack of a strong convergence process to the EU Standard probably because of an unclear accession date to the EU and of the Balkan Civil War. The aim of this paper is to understand the role of institutions in shaping a strong localization advantage for FDI. The quest of reliable and safe institutions has recently emerged in the economic literature, first as a catalyst for growth and more recently as an inward-FDI attractor mainly in transition economies. Contrary to the New Institutional School, we argue that institutions are not pre-condition to FDI but the result of an interaction between host countries and foreign investors. Such an institutions-based attractiveness could help the Southern European Transition Countries to become a new frontier for FDI in the future.

Suggested Citation

  • Fabry, Nathalie & Zeghni, Sylvain, 2006. "FDI in the New European Neighbours of Southern Europe: a quest of institutions-based attractiveness," MPRA Paper 1109, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1109
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    References listed on IDEAS

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    Cited by:

    1. Agnes Szunomar, 2017. "Driving forces behind the international expansion strategies of Chinese MNEs," IWE Working Papers 237, Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences.
    2. Roland Bardy & Stephen Drew & Tumenta Kennedy, 2012. "Foreign Investment and Ethics: How to Contribute to Social Responsibility by Doing Business in Less-Developed Countries," Journal of Business Ethics, Springer, vol. 106(3), pages 267-282, March.
    3. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human developement : an economic perspective applied to transitional countries of Europe and CIS," MPRA Paper 9235, University Library of Munich, Germany.
    4. Zeghni, Sylvain & Fabry, Nathalie, 2008. "Building institutions for growth and human development: an economic perspective applied to the transitional countries of Europe and CIS," MPRA Paper 9171, University Library of Munich, Germany.

    More about this item

    Keywords

    FDI Institution Attractiveness Southern European transition Countries;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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