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The last picture is Fig. N.7: showing INWARD FDI in both countries, as
percentage of GDP. Of course, there is a difference between the two: the FDI in
Slovakia are bigger than in Slovenia, but we can observe that, if expressed as a
percentage of GDP, the difference is not as large as thought. It is questionable, in
my opinion, to consider FDI flows without relationship to the size of the economy:
bigger economies offer more opportunities to investors. There are also other
elements of judgment, but size is certainly an important element. Also, the
regression projection shows that Slovenia might catch up in the next years. In this
case, I think we can state, it would be a premium for the more equilibrated
economic policy of the country.
20
E. The elemental inter-play
In order to study this aspect, we carried out a multiple regression analysis
taking into account all the variables of Table 2 and searching for multiple linear
regression, obtaining expressions (1), (2), (3) AND (4).
FDIINWARD =−0,14GDP − 0,431CPINFL + 0,047UNEMPL + 4, 412 1
SLK SLK SLK SLK
( )
( )
FDIINWARDSLO = 0,318GDPSLO + 0,839CPINFLSLO + 0,037UNEMPLSLO −12,765
2
FDIINWARDPOL = 0,040GDPPOL + 1,716CPINFLPOL + 0,531UNEMPLPOL −15,445(3)
FDIINWARDRUS = 0,034GDPRUS+ 0,026CPINFLRUS+ 0,0211UNEMPLRUS − 7,581(4)
They are connecting the data of INWARD FDI, as dependent variable, with
the variables describing the situation of the two economies. We tried all the
variables listed in fig. 2, but only the three indicated, resulted as significant in
explaining the dependence. They are: GDP level, CONSUMER PRICE
INFLATION and UNEMPLOYMENT level.
In all cases unemployment level is positively correlated to FDI, which is
pretty logical: if there is more unemployment, , it depends on low demand and big
offer for labor, which is depressing labor costs, and thus, attracting FDI.
The other two variables are connected to FDI in a different way in each
country: in Slovakia inflation and GDP are negatively correlated to FDI, meaning
that higher GDP and INFLATION would reduce FDI, whereas in Slovenia, Poland
and Russia would be the opposite. Maybe this aspect could be explained with the
kind and quality of FDI in both countries. If in Slovakia FDI is more “industrial” in
kind, it is looking for localizations less interested to the domestic market. If
company A, the foreign investor, is not looking for local market, but is mostly
interested to local labor, it is also inversely interested to GDP growth on that
market and inflation: richer people do not need to look for employment in foreign
companies and inflation growth may also be not welcome, creating pressures also
to wage rising.