Assessment of the risk of foreign divestment in Poland during the COVID-19 pandemic

Abstract

The importance of foreign direct investment (FDI) to the economic development of Poland cannot be overestimated, both at the regional level and in relation to the economy as a whole. Since FDIs are powered by capital sensitive to various national and international crises, it seems natural to ask whether the situation connected with the global COVID-19 pandemic is reflected in the reduction of FDI inflows to Poland. The aim of the paper is to identify the determinants of the foreign divestment process in the Polish economy as a whole and in its main sectors during the COVID-19 pandemic. The article analyses scenarios of foreign divestment in Poland in an annual perspective, starting from the outbreak of the epidemic in March 2020 up to February 2021. The study used data from a survey conducted in April and May 2020 among nearly 500 enterprises realising FDI in Poland. The benchmark for the surveyed companies was the level of their involvement in FDIs covering a one-year period prior to the announcement of the epidemic. The application of logit models allowed the identification of the most important factors of foreign divestment during COVID-19, including the location of FDIs in the services sector, industry, the IT sector, increased market openness and interactions of variables taking into account the restrictions introduced to the economy due to the pandemic. The level of risk of divestment of these variables depends, however, on the volume of FDI reductions declared by investors and on the sector of the economy. If considerable divestment is assumed, FDIs in the services sector are then burdened with a higher risk of divestment than FDIs in the processing industry. Assuming small divestments, FDIs in the IT sector constitute a factor bearing the greatest risk of FDI reduction in the entire economy.

Research on the Evolution and Driving Factors of the Economic Spatial Pattern of the Guangdong–Hong Kong–Macao Greater Bay Area in the Context of the COVID-19 Epidemic

“…The consumption of goods and services fell markedly due to a sharp decline in individual income and weak consumer confidence. The COVID-19 pandemic also exposed some underdeveloped economies to foreign divestment, resulting in losses in production [4]. With the gradual improvement in the global epidemic situation, coupled with the stimulus measures taken by governments and central banks to increase fiscal spending, reduce taxes and fees, cut interest rates, and reduce the reserve requirement, the global economy has shown signs of gradual recovery, and people have begun to pay ISPRS Int.…”