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The Motives and Impediments to FDI in the CIS

Author

Listed:
  • Malgorzata Jakubiak
  • Alina Kudina

Abstract

This paper examines the motives behind foreign direct investment (FDI) in a group of four CIS countries (Ukraine, Moldova, Georgia and Kyrgyzstan) based on a survey of 120 enterprises. The results indicate that non-oil multi-national enterprises (MNEs) are predominantly oriented at serving local markets. Most MNEs in the CIS operate as 'isolated players', maintaining strong links to their parent companies, while minimally cooperating with local CIS firms. The surveyed firms secure the majority of supplies from international sources. For this reason, the possibility for spillovers arising from cooperation with foreign-owned firms in the CIS is rather low at this time. The lack of efficiency-seeking investment poses further concern regarding the nature of FDI in the region. The most significant problems identified in the daily operations of the surveyed foreign firms are: the volatility of the political and economic environment, the ambiguity of the legal system and the high levels of corruption.

Suggested Citation

  • Malgorzata Jakubiak & Alina Kudina, 2008. "The Motives and Impediments to FDI in the CIS," CASE Network Studies and Analyses 0370, CASE-Center for Social and Economic Research.
  • Handle: RePEc:sec:cnstan:0370
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marek Dabrowski, 2014. "EU cooperation with non-member neighboring countries: the principle of variable geometry," CASE Network Reports 0119, CASE-Center for Social and Economic Research.
    2. International Monetary Fund, 2012. "Republic of Moldova; Selected Issues," IMF Staff Country Reports 12/289, International Monetary Fund.
    3. Daria Zvirgzde & Daniel Schiller & Javier Revilla Diez, 2013. "Location choices of multinational companies in Ukraine," ERSA conference papers ersa13p219, European Regional Science Association.
    4. Codruta DURA & Imola DRIGÃ, 2013. "The Rise of Emerging Multinationals from Russia – Models, Drivers and Internationalization Strategies," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(3), pages 387-399, July.
    5. Johan Swinnen & Kristine Van Herck, 2012. "Food Security: Challenges and Opportunities for Eastern Europe and Central Asia," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 9(1), pages 37-52, June.
    6. Imola DRIGÃ & Codruþa DURA, 2013. "Restoring the Economic Power of Russia through OFDI Expansion," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 16(2), pages 227-241, December.
    7. Codruța Dura & Imola Drigă, 2012. "Russian Multinationals in Romania and their Impact upon the Romanian Economy," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 12(1), pages 109-120.

    More about this item

    Keywords

    FDI; CIS; industrial organization; investment motives;

    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
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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