Investment Promotion in the Visegrad Countries: A Comparative Analysis

The effects of state aid policy trade-offs on FDI openness in Central and Eastern European Countries

“…The goal of this article was to provide a quantitative assessment of the policy trade-offs of different state aid tools on the CEECs' inward FDI policies. Because CEECs are capitalscarce economies, it is imperative for them to attract foreign capital (Tőrös et al, 2017). This paper showed how, across different models and specifications, there is a positive, strong association of regional aid allocations with FDI openness among the CEECs, suggesting that shifts in state aid policy towards more regional allocations tend to be conducive to more FDI openness.…”

“…These results help make sense of the seemingly paradoxical findings regarding the nexus between government policy in terms of investment incentives and FDI openness. Past studies did not analyse the association between regional aid and FDI openness in a systematic manner (Ślusarczyk & Kot, 2012); found uncertain effects for FDI incentives (Beyer et al, 2002); or fell short of providing evidence about the impact of regional aid expenditures on FDI openness that could apply to all the CEECs (Drahokoupil, 2009;Medve-Bálint, 2015;Tőrös et al, 2017).…”

“…These are mostly based on case studies of a limited number of countries in the region and in which the different types of available incentives are described and analysed (e.g. Anton, 2017;Éltető & Antalóczy, 2017;Tőrös et al, 2017). In several cases, regional aid is mentioned explicitly, but little evidence exists with regards to the effectiveness of regional aid schemes (Drahokoupil & Galgóczi, 2015, p. 34;Tőrös et al, 2017, p. 214).…”

“…On the one hand, qualitative case studies on the CEECs' investment policies often emphasise the importance of subsidy packages in attracting foreign investors (e.g. Medve-Bálint, 2014;Tőrös et al, 2017); on the other hand, quantitative analyses offer a mixed record in support for government policies as a tool of investment promotion and attraction (e.g. Morisset, 2003;Oman, 2000).…”

“…Among the CEECs, all have, at one point or another, employed investment incentives (see Anton, 2017;Cass, 2007;Éltető & Antalóczy, 2017;C. Jensen, 2006;Tőrös et al, 2017). For instance, Czechia amended its 1998 investment laws multiple times between 2012 and 2021, as did Bulgaria; Romania recently amended its scheme of investment support for promoting regional development; in 2018 and 2019, Slovakia and Poland also introduced laws to promote investment 3 .…”