FDI Determinants in Central and Eastern Europe and the Impact of the Global Economic Crisis
Keywords:
FDI determinants, Global financial and economic crisis, Central and Eastern Europe, Panel data.Abstract
The purpose of this paper is to analyse the determinants of Foreign Direct Investment (FDI) in the countries of Central and Eastern Europe (CEE) in the years leading up to and during the first phase of the economic crisis, with the intention to discover how the advent of the economic and financial crisis impacted upon FDI inflows in CEE as well as on the pattern of their determinants. Results point to the significance of factors that vary intensely over time, reflect the fluctuations of the macroeconomic environment (especially as a result of the crisis) and are mainly related to the short-term viability of investment projects, in contrast with locational, traditional and transitional determinants that vary slowly over time and reflect the longer-term direction of the economy, highlighted by previous research. Policies need to be designed towards a direction that encourages the integration of FDI into the host economies, as well as the empowerment of local communities, the revival of domestic economic activity and the partnerships between foreign investors and their host economies.
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