Re‐entering Europe: Does European Union candidacy boost foreign direct investment?

Abstract

This study examines the ability of the Central and Eastern European countries to attract foreign direct investment during the first decade of transition. After considering a model of profit maximizing firms, we undertake an empirical investigation of the factors that determine multinational firms' location decisions within Europe. We find empirical support for the traditional market size and cost factors. In addition, we examine the effect of key European Union announcements regarding the accession process. Results indicate that the announcements had statistically significant and quantitatively important effects on foreign direct investment in the Central and Eastern European candidate countries.JEL classifications: F23, P33.

Foreign Direct Investment as a Factor of Diminishing or/and Increasing Regional Inequalities?

“…Despite quite weak correlations in the p-value of the models, which show less than 0.05 in all the cases, they seem significant. Thus, our findings do not contradict other results that emphasise the role of market size in fDi attraction (Bevan & eStrin 2004;caSi & reSMini 2010;ClausiNg & DoroBaNțu 2005;DaNCiu et al 2011;deMeKaS et al 2007). in addition, a lag-time certainly must occur between fDi-induced growth and gDP growth (PeliNesCu & răDulesCu 2009).…”

Did Financial Integration Provide Financial Depth to ASEAN Countries?

“…This is well documented that capital market integration follows the economic integration. Clausing and Dorobantu (2005) reported that investors would divert funds to those markets (economies) which are open to trade and enjoy the stable economic environment. Davis (2012) also considered bilateral trade integration as an important and supportive factor for fruitful integration.…”

Signalling Demand for Foreign Investment: Postsocialist Countries in the Global Bilateral Investment Treaties Network

“…In addition, we included a variable that captures whether a country is a European Union (EU) member, because this has been shown to matter for attracting FDI (Bevan & Estrin 2004;Clausing & Dorobantu 2005;Cirtautas & Schimmelfennig 2010). This is a country and time-varying dummy variable that equals 1 when a country is an official member of the EU.…”