Foreign Direct Investment into Transition Economies: Are the Balkans Different?

Abstract

The paper explores the determination of foreign direct investment (FDI) into the Balkan transition economies -Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Serbia. Detailed FDI inflows to Southeast Europe (SEE) are analysed to determine the main differences in the volume, timing and sectoral structure of FDI within the region and in comparison to the Central East European countries. A gravity model to all transition economies during 1990-2011 is then estimated to assess whether the factors driving FDI to the Western Balkans are different. They are found to be so; even when size of their economy, distance, institutional quality and prospects of EU membership are taken into account, Western Balkans countries receive less FDI. These issues are of high policy relevance for the Balkan economies and ought to contribute to the current debate on the 'new growth model'. JEL Classification:P3, O4, F2

Determinants of inward FDI into Visegrad countries: empirical evidence based on panel data for the years 2000–2012

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“…The relation depends on the type of the FDI, as horizontal investments may restrain trade, whereas vertical ones may facilitate it, especially with the investing country (Camarero and Tamarit, 2003). Regarding the region of the South-Eastern Europe, Mehić and Babić-Hodović (2011) found positive and statistically important influence of the FDI on exports of the SEEs, which was in a contrary to results of Estrin and Uvalic (2013). …”

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