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Institutions in transition: is the EU integration process relevant for inward FDI in transition European economies?

Institutions in transition: is the EU integration process relevant for inward FDI in transition European economies?

Delevic, Uros and Heim, Irina (2017) Institutions in transition: is the EU integration process relevant for inward FDI in transition European economies? Eurasian Journal of Economics and Finance, 5 (1). pp. 16-32. ISSN 2148-0192

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Abstract

This research challenges the contemporary view of economic policy makers in transition European economies that the EU integration process will lead to a greater inflow of Foreign Direct Investments (FDI), thereby increasing living standards. With the Brexit referendum, the integration of the EU has been threatened by a distressing existential question: is EU membership valuable for transition countries if even developed countries (like the UK) vote to leave or decided not to align like Switzerland and Norway in the past? Our analysis considers the success of several countries in Eastern Europe in attracting and benefiting from FDI on their way to EU membership. Analyzing a 13-year panel data of 16 transition countries, we found no statistically significant positive association between FDI inflow and EU accession. We argue, that it is also important to consider the welfare for domestic economies that can emerge from those investments. We illustrate this through the case study of a successful combination of institutional development and local content policies implementation accompanied by sufficient FDI inflows in a non-EU country - Kazakhstan.

Item Type: Article
Uncontrolled Keywords: transition economies, institutional change, economic development, EU integration, foreign direct investments, theory of MNEs
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
Last Modified: 27 Apr 2021 10:16
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None
URI: http://gala.gre.ac.uk/id/eprint/29999

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