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Does economic convergence with the European Union mean more FDI flows to an economy? Analysis on 5 Central and Eastern Europe countries

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  • Alexe, Ileana
  • Tatomir, Cristina F.

Abstract

In this paper we analyze the relationship between economic convergence with the European Union (EU) and foreign direct investment flows to 5 EU countries (Bulgaria, Czech Republic, Poland, Romania and Hungary) in the period 2001 – 2010, in order to determine if the process of economic convergence with the EU level influences FDI inflows in these economies. We use an economic convergence index, made up of real and structural convergence indexes, to assess the level of economic convergence. The study does not provide us with a clear response to our question. We report a tight relationship between convergence index and FDI inflows in Bulgaria, but quite divergent evolutions of the two variables in the case of Hungary.

Suggested Citation

  • Alexe, Ileana & Tatomir, Cristina F., 2011. "Does economic convergence with the European Union mean more FDI flows to an economy? Analysis on 5 Central and Eastern Europe countries," MPRA Paper 36139, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36139
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    References listed on IDEAS

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    5. Marius-Corneliu Marinas, 2006. "Determinants of Business Cycle Convergence in Euro Area. The Romanian Case," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 10(10(505)), pages 45-54, December.
    6. Raquel Díaz, 2004. "Foreign direct investment and regional convergence: an international approach," ERSA conference papers ersa04p374, European Regional Science Association.
    7. Miron, Dumitru & Dima, Alina & Paun, Cristian, 2009. "A model for assessing Romania's real convergence based on distances and clusters methods," MPRA Paper 31410, University Library of Munich, Germany.
    8. Miao Wang & M. C. Sunny Wong, 2007. "Foreign Direct Investment Outflows and Business‐cycle Fluctuations," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 146-163, February.
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    More about this item

    Keywords

    convergence index; foreign direct investments; European Union;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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