This paper explores the influence of the quality of a host country's institutional environment on outflows from that country of foreign direct investment. The main finding of this paper is that such quality does play an important role, particularly with respect to governance quality and political stability. This implies that better institutional conditions may reduce undesirable outflows of capital, and the quality of those institutions may impact FDI effectiveness in host countries.
For many years, services attracted most of the foreign direct investment (FDI) in Central and Eastern European countries. Recently, a distinctive type of business services, i.e., advanced business services (ABS), has become the focal point in FDI in the region. This paper is aimed at defining the role of agglomeration economies in FDI in ABS in Poland. The topic is important from the policy point of view, as foreign investment is supported by the host country’s authorities, and various incentives are provided. The research method applied in this paper is the negative binomial regression. The outcome variable was the number of firms operating in ABS in particular regions. Explanatory variables pertain to the characteristics of 16 regions classified as Level 2 under the Nomenclature des Unités territoriales statistiques (Nomenclature of Territorial Units for Statistics or NUTS) in Poland. The main conclusion of the research is that agglomeration economies are important in the decision of the firms investing in ABS in Poland. The most important factor is the concentration of supply factors, such as abundance of educated employees. The specific features of ABS are associated with lower importance of demand factors in a region.
Advanced business services in the global economy and the Visegrád Group economies The paper aims to present recent trends in global trade and investment in advanced business services (ABS). Special attention is given to the position of Visegrád countries in international movements of services and associated activities. The research method applied in the study is the statistical analysis of aggregate data on trade and foreign direct investment (FDI). The data were extracted from the World Trade Organization (WTO) and the Organisation for Economic Cooperation and Development (OECD) databases. The main finding is that services are still less traded than merchandise. Still, knowledge-intensive services are gaining importance as their share in trade of services reaches 15%. As a result of the study, major problems with data regarding services were identified. The results confirm the global importance of the services based on knowledge. This is significant, as ABS create a narrow group of specialized services. Importantly, ABS are quite inclusive and many emerging economies become global providers of such services.
This paper is aimed at investigating determinants of recent flows of foreign direct investment (FDI) into advanced business services (ABS) in the European Union with the distinction between “old” (till 2004) and “new” member states (after 2004 extension). Special attention is put on the Visegrád countries. The factors affecting location decisions of multinational corporations were analysed at the national and regional level. The latter approach proved to be very effective due to the fact that foreign companies operating in ABS are highly unequally distributed across economies. Indeed, there are only few regions in economies attracting bulk of the operations in ABS.The research method applied in the paper is negative binomial regression, which measures the probability of occurrence of an ABS foreign firm in an economy or a region taking into consideration its characteristics. This research combines macroeconomic, regional and firm-level data. The explanatory variables are divided into two groups: demand and supply. The main conclusion is the high significance of the supply factors. In other words, foreign companies focus on locations offering large number of skilled workers at reasonable prices. The key recommendation for governments interested in attracting ABS type of investment is to focus on the quality of human capital.
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