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

C. FDI in Central and Eastern European Countries
Central and Eastern European countries have witnessed a considerable
increase of FDI inflows since the collapse of communism and the chance to join
the European Union. FDI has been an important source of financing and a catalyst
for the economic development for many of these nations. Therefore, while
competing for FDI, countries tried to implement structural reforms aimed at
improving their investment climate. Deichmann et al. (2003) found that the level of
reforms is a significant positive determinant of FDI inflows into transition
economies. Since FDI in developing countries is usually export-oriented, the
policies that a host country implements are also designed to facilitate trade. Thus,
FDI not just stimulates the growth of the economy but also accelerates international
trade, which in turn favourably affects the economic growth of the country. The
leading recipients of FDI in eastern/central Europe have been Poland, Czech
Republic, Hungary and Slovakia. These countries were the first ones to reform
their economies and they are among the first countries that joined the European
Union in 2004.
Investors in Central and Eastern European countries have a variety of motives
when choosing a recipient of FDI. Lankes and Venables (1996) show that FDI
projects in these countries are very heterogeneous and differ in terms of size,
objectives, technology, location, ownership, and control requirements. Therefore,
when assessing the impact of FDI, it is important to study it on a country-bycountry
basis. Brenton and Di Mauro (1999) analyzed FDI inflows to the CEE
countries, their results showing positive association of FDI to GDP, whereas
market size, measured by population, does not appear to significantly influence
FDI inflows. They also found that the distance coefficient was significantly
negatively associated as cost of subsidiary managing, increases with the distance.
Therefore, FDI may substitute exports in distant countries. Aturupane at al. (1999)
and Walkenhorst (2001, 2004) found a positive correlation between trade and FDI
in transition economies, suggesting that FDI and trade are complements, rather
than substitutes in these countries.
In another empirical analysis of FDI inflows to the CEE countries, Bevan and
Estrin (2000) took the host country’s credit risk into account. Their results show
that FDI is determined by the host country’s risk and size, labour costs and
distance. They also found evidence that an announcement about future admission
to the European Union had a direct and positive influence on FDI. Contrary to this
study, Altomonte (2000) concluded that FDI appears to be influenced mostly by
GDP per capita and population, but not by distance. In addition, in emerging and
transition economies, certain sectors such as manufacturing and science-based
development attract FDI, mainly due to lower labour costs.
7