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The Determinants of Foreign Direct Investment Inflows in Transition Economies of Southeast Europe and the Former Soviet Union: Evidence From Panel Analysis 2002-2019

Gaprindashvili, Nino LU (2023) EOSK12 20231
Department of Economic History
Abstract
The surge in multinational corporations and increased globalization have brought substantial attention to Foreign Direct Investment (FDI), a business phenomenon of considerable importance. Nevertheless, the global distribution of FDI is rather uneven, with transition countries being especially problematic. Although FDI has been assigned a crucial role in raising capital during structural changes toward a functioning market economy, transition countries in Southeast Europe and the former Soviet Union states have yet to address the legacy of a centrally planned system and establish fertile grounds for attracting FDI. This research focuses on the particular sample of 15 transition economies in this region between 2002 and 2019 and studies... (More)
The surge in multinational corporations and increased globalization have brought substantial attention to Foreign Direct Investment (FDI), a business phenomenon of considerable importance. Nevertheless, the global distribution of FDI is rather uneven, with transition countries being especially problematic. Although FDI has been assigned a crucial role in raising capital during structural changes toward a functioning market economy, transition countries in Southeast Europe and the former Soviet Union states have yet to address the legacy of a centrally planned system and establish fertile grounds for attracting FDI. This research focuses on the particular sample of 15 transition economies in this region between 2002 and 2019 and studies potential determinants of FDI among economic and institutional variables using panel fixed effects regression model. Empirical results suggest that FDI in transition economies is positively and significantly affected by trade openness and GDP per capita growth. Among the institutional factors, Voice and Accountability create significant and favorable conditions for stimulating FDI. The research also finds that natural resource rents and the Rule of Law discourage FDI, although the evidence is relatively weak. Results also reveal that inflation, infrastructure development, and political stability do not have any significant impact on FDI. (Less)
Please use this url to cite or link to this publication:
author
Gaprindashvili, Nino LU
supervisor
organization
course
EOSK12 20231
year
type
M2 - Bachelor Degree
subject
keywords
Foreign Direct Investment, FDI, Transition, Institutions, Panel Regression
language
English
id
9119504
date added to LUP
2023-06-09 12:09:30
date last changed
2023-06-28 13:47:05
@misc{9119504,
  abstract     = {{The surge in multinational corporations and increased globalization have brought substantial attention to Foreign Direct Investment (FDI), a business phenomenon of considerable importance. Nevertheless, the global distribution of FDI is rather uneven, with transition countries being especially problematic. Although FDI has been assigned a crucial role in raising capital during structural changes toward a functioning market economy, transition countries in Southeast Europe and the former Soviet Union states have yet to address the legacy of a centrally planned system and establish fertile grounds for attracting FDI. This research focuses on the particular sample of 15 transition economies in this region between 2002 and 2019 and studies potential determinants of FDI among economic and institutional variables using panel fixed effects regression model. Empirical results suggest that FDI in transition economies is positively and significantly affected by trade openness and GDP per capita growth. Among the institutional factors, Voice and Accountability create significant and favorable conditions for stimulating FDI. The research also finds that natural resource rents and the Rule of Law discourage FDI, although the evidence is relatively weak. Results also reveal that inflation, infrastructure development, and political stability do not have any significant impact on FDI.}},
  author       = {{Gaprindashvili, Nino}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Determinants of Foreign Direct Investment Inflows in Transition Economies of Southeast Europe and the Former Soviet Union: Evidence From Panel Analysis 2002-2019}},
  year         = {{2023}},
}