Foreign direct investment in emerging and transition european countries

Abstract

Many of the emerging and transition economies in Central and Eastern Europe (CEE) have been building their economies largely on the infrastructure inherited from Communist times. It is widely recognized that much of the infrastructure in both the private and public sectors must be replaced if those economies are to achieve acceptable rates of economic growth and participate successfully within the broader European Union (EU) economic zone (The Economist, 2003). Upgrading infrastructure includes the likely importation of technology and management expertise, as well as substantial financial commitments. In this regard, inward foreign direct investment (FDI) is a particularly important potential source of capital for the emerging and transition European economies (ETEEs). FDI usually entails the importation of financial and human capital by the host economy with measurable and positive spillover impacts on host countries’ productivity levels (Holland & Pain, 1998a). The ability of ETEEs to attract and benefit from inward FDI should therefore be seen as an important issue within the broader policy context of how these countries can improve and expand their capital infrastructure, given relatively undeveloped domestic capital markets and scarce human capital.

Citation

Globerman, S., Shapiro, D. and Tang, Y. (2006), "Foreign direct investment in emerging and transition european countries", Batten, J.A. and Kearney, C. (Ed.) Emerging European Financial Markets: Independence and Integration Post-Enlargement (International Finance Review, Vol. 6), Emerald Group Publishing Limited, Leeds, pp. 431-459. https://doi.org/10.1016/S1569-3767(05)06017-6