Improving the Financial Setting for FDI Inflows into Czech Republic and Slovakia: Innovative Methodology Bolsters Outcomes

Abstract:     
As the Czech and Slovak Republics move toward free societies and market economies, some policy points to consider include: transparency of markets, economies, social and political organizations; an increase in commerce and investment, which makes reversals of reforms less likely (see the reversals in Russia just now); and the condition or quality of financial factors that contribute as useful tools of analysis and forecast to increased investment and transparency. Roland (2002), Wade (2005), and Kyrkilis and Pantelidi (2006) all discuss FDI relative to political risk and social and legal transparency issues.

At this time, these economies in transition have many of the resources needed for development, such as educated labor forces, an entrepreneurial orientation among the people, and land. Yet, another key resource, capital, is in short supply in the region. An important concept in obtaining capital is to demonstrate economic and political stability. By improving transparency of the legal, banking, and capital markets sectors, the Czech and Slovak Republics can accelerate progress toward free and democratic societies.

The value of this research effort is to examine whether relationships among country risk ratings, financial market variables, and expected returns in this region exist and can be useful in improving the capital markets systems and so attract more capital to the region.

Number of Pages in PDF File: 20

Keywords: Czech, Slovakia, transition economies,qualitative methodologies

JEL Classification: F30, G15, O50, O57

working papers series