The determinants of FDI location choice in the Western Balkan countries

Kurtović, Safet; Maxhuni, Nehat; Halili, Blerim; Talović, Sead

doi:10.1080/14631377.2020.1722584

Cited by 22 publications

(10 citation statements)

References 28 publications

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“…However, the dynamic GNI growth variable is slightly negative and significant in Model 5 (− 0.001) and Model 6 (− 0.0002), probably reflecting interference by more-dominant variables in these models. This outcome is in opposition to findings by Korović et al ( 2020 ) based upon a similar set of countries and should be revisited. In addition, the negative and significant valence of the economic openness variable conflicts with findings on economic globalization by Bojnec and Fertö ( 2018 ).…”

Section: Resultscontrasting

confidence: 92%

“…The models and illustrations point to the potential to increase FDI propensity from MNEs based in more distant but culturally less similar countries such as China, Japan, and South Korea, all of which benefit from other enabling characteristics related to their national wealth and economic globalization. This observation confirms other evidence from OECD countries (Bojnec and Fertö, 2018) and the Western Balkans (Kurtović et al, 2020) on the role of market strength, market growth, economic openness, taxation, transparency, and national wealth as FDI determinants. Importantly, this study uses an appropriate but less-common logit model methodology to focus on the investment decision rather than the magnitude of investment, based upon a very large data set.…”

Section: Discussionsupporting

confidence: 90%

“…Additional location-specific advantages of destination countries include population/market size (Botrić & Škuflić, 2006 ), low labor costs (Janicki & Wunnava, 2004 ; Estrin & Uvalic, 2014 ), low corporate tax rates (Estrin & Uvalic, 2014 ), and national wealth measured as GDP per capita (Botrić & Škuflić, 2006 ). In a more recent study of FDI per capita across six Balkan countries, Kurtović et al ( 2020 ) use a partial adjustment model with time series data through 2017. Their study reveals GDP per capita, GDP growth rate, services agglomeration, and government spending to be significant determinants.…”

Section: Scholarly Research On Fdi In Europe’s Transition Statesmentioning

confidence: 99%

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FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries

2022

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This research examines FDI location choice across the successor states of Yugoslavia roughly 25 years after dissolution. Based upon 12,245 pairwise observations from 2005 to 2016, the paper employs logit models to estimate empirically the impact of geographic distance, cultural similarity, and geo-cultural interaction on FDI propensity. The contributions are twofold. First, while geographic distance and culture similarity are typically modeled as independent FDI determinants, their interaction is also examined here. Second, the paper contributes to the sparse scholarship on FDI in this complex European region, using binary-choice models to highlight its linkages to the global economy. The findings suggest that—in addition to mainstream economic, regulatory, and political factors—a tradeoff exists between distance and culture in attracting FDI. Host governments seeking FDI that promotes economic growth might increase the likelihood of FDI by targeting geographically-proximate partners that are culturally similar. The role of geographic distance in reducing FDI propensity gives way to other enabling variables beyond the distance of 1800 km.

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Section: Resultscontrasting

confidence: 92%

Section: Discussionsupporting

confidence: 90%

Section: Scholarly Research On Fdi In Europe’s Transition Statesmentioning

confidence: 99%

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FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries

2022

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“…FDI's inflow is also influenced by the social, political and institutional characteristics of a country. Studies within the socio-political and political-institutional genres have identified that political soundness, effective governing, proper regulations, voice and accountability, active start-up regulations, economic freedom, ease of doing business, government spending, improved one-stop services dedicated for international trade are the major determinants of FDI among world's emerging economies (Alam et al 2019;Contractor et al 2021;Ibrahim et al 2020;Kurtović et al 2020;Mourao 2018;Paul and Jadhav 2019;Rashid et al 2017). Numerous other studies have assessed determinants such as inflation, exchange, interest, and GDP growth rate, per capita GDP, export, import, gross national income and, external debt (Asiamah et al 2019;Gupta 2018;Hossain 2021;Ibrahim and Abdel-Gadir 2015;Jaiblai and Shenai 2019;Kishor and Singh 2015;Sabir et al 2019;Yimer 2017).…”

Section: Introductionmentioning

confidence: 99%

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Morshed

Hossain

2022

SN Bus Econ

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We tested the causality between FDI and its determinants in Bangladesh in the presence of structural break harnessing Vector Autoregression (VAR) model and Granger causality test. Regressors such as GDP growth rate, inflation, interest, corporate tax, exchange and wage rate, and trade openness (TO) have been used. VAR model finds that interest, tax, wage, and exchange rate do not affect inward FDI. However, the inflation rate and TO significantly impact the inward FDI in Bangladesh. The Granger causality test reveals a bidirectional causality in the FDIinflation and FDI-TO nexus, whereas other explanatory variables do not cause the FDI granger. Variance decomposition (VDC) and impulse response function (IRF) assessment approve strong, moderate, and poor or no explanatory power of TO, inflation, and other explanatory variables, respectively. Regarding FDI-inflation bidirectional causality, we observed both natural (inflation truly causes FDI) and fake causality (FDI does not necessarily cause inflation). Therefore, when inflation causes FDI, then Bangladeshi Taka (BDT) becomes strong against USD, which increases import and reduces export (import > export). Due to the negative trade balance, this is true for Bangladesh. However, if FDI causes inflation, it will depreciate BDT; consequently, the export will surpass the total import, which is not the case in Bangladesh. Therefore, inflation causes FDI in Bangladesh, and this punch line ends the ongoing debate in the FDI-inflation-exchange rate nexus in Bangladesh. Finally, we recommend decreasing the lending interest rates to encourage further investment, adopting tax holidays, developing a skilled and semi-skilled workforce to harness the advantage of lower wage rates, and being more open to facilitating FDI-led development.

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“…13 Quantitative methods mainly rely on statistical approaches, which are complex to manage mainly because of the large amount of data required. 14 In the last years, the multi-criteria decision-making (MCDM) models are the most used due to their high level of applicability. 13 Ray et al show in their review all the MCDM methods that have been used in the facility location selection problem, assessing the extended use of AHP 15 and TOPSIS, 16 which authors have selected because of their ease of applicability and adaptation.…”

Section: Literature Reviewmentioning

confidence: 99%

Multi-criteria decision-making model for supporting manufacturing settlements location in Africa after COVID-19

Bait

Lauria

Schiraldi

2021

International Journal of Engineering Business Management

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The COVID-19 emergency is affecting manufacturing industries all over the world. Notably, it has generated several issues in the products’ supply and the global value chain in African countries. Besides this, Africa’s manufacturing value-added rate grew only 1.5 since 2018, and the foreign direct investment (FDI) from multinational enterprises (MNEs) remains very low due to high-risk factors. Most of these factors are linked to a non-optimized location selection that can adversely affect plant performance. For these reasons, supporting decision-makers in selecting the suitable country location in Africa is crucial, both for contributing to countries’ growth and companies’ performance. This research aims at presenting a comprehensive multi-criteria decision-making model (MCDM) to be used by MNEs to evaluate the best countries to develop new manufacturing settlements, highlighting the criteria that COVID-19 has impacted. Thus, it has affected countries’ performance, impacting the plant location selection choices. A combination of the Analytic Hierarchy Process (AHP) and the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) methods have also been used for comparative analysis. The criteria used in the proposed approach have been validated with a panel of MNEs experts.

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The determinants of FDI location choice in the Western Balkan countries

Cited by 22 publications

References 28 publications

FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries

FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries

Causality analysis of the determinants of FDI in Bangladesh: fresh evidence from VAR, VECM and Granger causality approach

Multi-criteria decision-making model for supporting manufacturing settlements location in Africa after COVID-19

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