inostrani kapital kao faktor razvoja zemalja - Ekonomski fakultet u ...

The cause of such trust may have very different origins, some may be purely
economic, others, for instance, cultural ones and several others. There may be also
a combination of reasons: Taiwan businessmen, for instance, prefer to invest into
Mainland China surely for economic reasons, as China offers cheap and good
quality labour, plus a huge and expanding market, but also cultural reasons play a
role: Taiwanese and Mainland Chinese share common linguistic and cultural
habits, making mutual understanding, communicating and trusting easier.
In this paper we will examine the inward FDI flows to Slovakia, Slovenia,
Poland and Russia, which have also some common cultural heritage, even if it is
not as immediate than between Taiwan and Mainland China, but it could play a
role.
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II. Review of Literature
A. Trends in FDI
In the past twenty years, the inflow of FDI has increased tremendously in the
world economy. In particular, it grew from 13 to 31% of GDP on average for all
developing economies (Henriot, 2003). The biggest reason for the rapid growth of
direct investment in Eastern and Central Europe is the movement of these countries
towards democracy and free market, accompanied by political and economic
reforms. According to Henriot (2003), FDI stock in this region jumped from 2% of
GDP in 1990 to 32% in 2002. Curiously, FDI tends to be concentrated in small
economies. For example, it reached 57% of GDP in Czech Republic, 43% in
Estonia and Slovakia, and 38% in Latvia (Henriot, 2003). According to the IMF,
there has been a shift in relative shares of net private investment in different
regions of the world during the past ten years. As shown in Table 1, the capital
flows to emerging market economies were relatively even at around 4% of GDP in
1996. However, by 2002, while the Asian share had dropped to 1% of GDP and the
share of Latin America was only 0.5% of GDP, the share of the European
accession countries had increased to 7% of their GDP. In addition, FDI seemed to
stimulate trade in these countries as their exports increased more than four times
between 1990 and 2000 and their imports were more than 5 times higher. Thus,
FDI cannot only stimulate economic growth of the host economy, but also affect
other variables that favourably impact the growth of GDP. FDI can take several
forms: green-field investment in new facilities, mergers and acquisitions of existing
firms, joint-ventures, portfolio investment and others. Mergers and acquisitions are
the more common types of FDI, as they are easier to be carried out, disposing
already of production and distribution systems, as well as of an established
customer base. In post-Soviet countries, large-scale privatization, which permitted
national enterprises to be acquired by private investors, recently outweighed greenfield
investments.