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If in Slovenia, Poland and Russia the foreign investing companies are of
another kind, let’s say, that they mostly operate in the distribution sector, they are
looking either for higher unemployment as it offers cheaper work-force, but also
higher GDP, as it creates demand for consumer goods. Higher inflation may
sometimes also be welcome for companies looking more to sell than produce.
But, of course, in order to give a more precise answer to those questions, a
more detailed sector analysis of FDI would be asked for, taking into account not
the generic FDI, but also the kind and quality of it.
F. Conclusions
The four countries studied have some historical, cultural and economic
elements in common: they were part of the socialist system from which they started
the transition process in the direction of the market economy. The success of this
change can be measured by the compliance with the conditions posed by the EU.
From this point of view the best performer until now is Slovenia, which had the
historical advantage of being also before transition official start, a transitional
country, covering the role of entrance door from the western world to the socialist
system of ex-Yugoslavia.
But, given its relative success, it is interesting to stress out the characteristics
of its transition process: instead of wanting to attract FDI at any cost, Slovenia
preferred to follow a strategy of equilibrated and harmonic development, for
instance, keeping under control the fiscal account and the current account by the
exterior balance. This made possible to her political forces to steer the country into
EU, Schengen, Euro area and even the presidency of the EU club. If a teaching can
be obtained from these data, it could be the following one: it is preferable for a
country to get a harmonic development instead of FDI at any cost. In such a case
FDI materialize also, as a gift after the endeavor, enforcing and enriching the
transition process results.
References
1. Altomonte, C. (2000). Economic Determinants and Institutional Frameworks: FDI
in Economies in Transition. Transitional Corporations, 9(2), 75-106.
2. Aturupane, C., Djankov, S., and Hoekman, B. (1999). Horizontal and Vertical
Intra-Industry Trade Between Eastern Europe and the European Union.
Weltwirtschaftliches Archiv, 135(1), 62-81.
3. Barrel, R., and N. Pain. (1996). An Econometric Analysis of U.S. Foreign Direct
Investment. Review of Economics and Statistics, 78, 200-207.
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