Foreign Investments and Institutional Convergence in South Eastern Europe

Kaditi, Eleni A.

doi:10.2139/ssrn.1619817

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Foreign Investments and Institutional Convergence in South Eastern Europe

LICOS Discussion Paper No. 260/2010

18 Pages Posted: 4 Jun 2010

See all articles by Eleni A. Kaditi

Eleni A. Kaditi

Centre for European Policy Studies (CEPS)

Date Written: June 3, 2010

Abstract

Foreign investments are in the focus of most governments around the world. In order to be able to set a policy agenda which is successful in promoting FDI, it is necessary to understand their determinants. This paper examines whether and to what extent sound institutions and the degree of regulation deter or attract FDI flows in four economies of Southeastern Europe. In a dynamic panel analysis, a broad set of institutional and regulatory variables that may affect the decision of foreign investors to undertake investment projects in this region is examined, using firm-level data. Analysis shows that the quality of the institutional environment significantly influences foreign capital. Governments in this region should, therefore, focus primarily on creating a good legal system, having relatively stable political and economic conditions.

Keywords: Foreign Investments, Corruption, Transition Economies

JEL Classification: F23, D73, P3

Suggested Citation: Suggested Citation

Kaditi, Eleni A., Foreign Investments and Institutional Convergence in South Eastern Europe (June 3, 2010). LICOS Discussion Paper No. 260/2010, Available at SSRN: https://ssrn.com/abstract=1619817 or http://dx.doi.org/10.2139/ssrn.1619817