How Does Economic Integration Affect Progress along the Investment Development Path? A Case Study of EU Member vs. Non-Member Countries from Eastern Europe

Abstract

A number of studies have dealt with the effects of economic integration on foreign direct investment, however without a comprehensive and simultaneous analysis of the overall positioning of these countries along the investment development path (IDP). In the current paper, a comparative analysis is conducted of IDPs of four Eastern European countries, both members and non-members of the European Union. The purpose of the paper is to determine the effect of economic integration on foreign direct investment (FDI) flows and on the movement of these Eastern European economies through their IDP stages.

The theory of the investment development path and agriculture in Eastern Europe

“…The investment development path was first demonstrated using charts [ 6 , 14 , 15 ]. Thus, the relevant literature used charts solely or partly [ 1 , 29 , [13] , [28] , [31] , [23] , [24] , [25] , [26] , 32 ]. The literature was followed in obtaining a scatter plot of net foreign direct investment per capita ( NFDIPC ) on the vertical axis and gross domestic product per capita ( GDPPC ) on the horizontal axis.…”

“…The gaps were filled by linear interpolation. Regression analysis was employed in line with the pertinent literature [ 1 , 10 , 11 , 28 , 22 , 27 , 32 ]. Since the time dimension exceeded 30 the cross-section, the generalised least squares estimator was applied following Baltagi and Wu [ 42 ] and Bhargava, Franzini and Narendranathan [ 43 ].…”

“…Boudier-Bensebaa [ 22 ] found stages I or II of the investment development path for countries in Eastern Europe and stage II was identified for Estonia [ 1 ], Poland [ 23 ], Poland, Czech, Hungary, and Slovakia [ 24 ], Eastern European countries [ 25 ], Kazakhstan [ 26 ] and transition countries [ 27 ]. Albania, Romania, and Georgia were reported to be in late stage III [ 28 ]. Stages II and III were also noted for Latvia [ 29 ] and Eastern European countries [ 13 ].…”

“…The literature on the investment development path in Eastern Europe has focused on Poland [ 23 ], the Baltic states [ 29 ], Visegrad [ 30 ], selected countries in Eastern Europe [ 28 , 24 ] and countries in Eastern Europe 1 [ 31 , 13 , 22 , 32 ]. There are three limitations to the literature.…”

The Investment development path theory: Evidence from developing countries’ agricultural sector

“…Since the seminal work of John H. Dunning in 1979, many papers about the IDP have been published. Whilst some focused on individual countries ( Bellak, 2001 ; Buckley and Castro 1998 ; Gorynia et al , 2009 ; Kosztowniak, 2018 ; Marton and McCarthy, 2007 ; Verma and Brennan 2011 ; Zhubikenov, 2022 ), others covered a collection of countries ( Andreff, 2003 ; Barry, Görg and McDowell, 2003 ; Borowicz, 2021 ; Boudier-Bensebaa, 2008 ; Dai, 2021 ; Djokoto, 2021a ; Djokoto and Pomeyie, 2021 ; Dunning & Narula, 1996 ; Dunning et al , 2001 ; Durán and Ubeda, 2001 , 2005 ; Fonseca et al , 2016 ; Gorynia et al , 2010a , 2010b , 2012 , 2019 ; Iacovoiu and Panait, 2014 ; Kuzel 2017 ; Ragoussis 2011 ; Satoglu, 2017 ; Trąpczyński et al , 2019 , 2022 ; Zhubikenov, 2022 ). Sawitri and Brennan (2022) and Serafim (2011) published some reviews.…”