Foreign direct investment and government policy in Central and Eastern Europe

Abstract

The 1990s have been a period of extraordinary politics in Central and Eastern Europe (CEE). This chapter discusses how the transition from state to market has created bureaucratic barriers to entry, but also windows of opportunity for foreign direct investment (FDI). The high costs and high investment risks associated with FDI in CEE are a reflection the institutional development. Thus, inflows of FDI have been largest in those countries that made most progress in establishing a market-oriented institutional framework.After outlining trends of institutional change and their impact on FDI, this chapter discusses how aspects of the institutional framework and FDI policy affect diverse types of investment projects. Acquisition and Greenfield investors are concerned with different aspects of government policy: privatization and regulatory policies for acquirers and investment incentives, regional policy and special economic zones for Greenfield investors. The shifting policy priorities have thus changed the types of projects undertaken by foreign investors in the region.

What drives FDI in Central–Eastern Europe? Evidence from the IWH-FDI-Micro database

“…on the CEE countries, labour costs (Bellak et al 2008) or institutional framework in the host country (Bevan et al 2004, Meyer andJensen 2004). Other surveys investigate the determinants of FDI in the CEE countries at the sectoral level showing that sector-specific factors affect the choice of the final location (Resmini 2000, Pusterla andResmini 2005).…”

The Effects of Institutional Difference and Resource Seeking Intent on Location Choice of Chinese Outward FDI

“…Until more recently, market-supporting institutions in international business setting have been taken for granted [42]. With the rise of emerging economies in the world, more research attention has been paid to the institutions in these economies, especially since the turn of the new century [63] [64]. When the market-supporting arrangements have been malfunctioned in these emerging and transition economies, their deficiency becomes conspicuous [8].…”

The Transnationalization of Economies, States, and Civil Societies

“…Implementation of the competition-state project cannot be understood just as an outcome of unequal distribution of power between foreign investors and the governments as the state-centric understanding of state-multinational bargaining would have it (e.g. Vernon 1998;Eden et al 2005;Meyer and Jensen 2005). The governments are not social actors independent of other social forces, including the investors.…”