The Motives and Impediments to FDI in the CIS

CASE Network Studies and Analyses No. 370

31 Pages Posted: 23 Apr 2009

See all articles by Alina Kudina

Alina Kudina

University of Warwick - Warwick Business School; CASE

Malgorzata Jakubiak

CASE - Center for Social and Economic Research

Date Written: April 21, 2009

Abstract

This paper examines the motives behind foreign direct investment (FDI) in a group of four CIS countries (Ukraine, Moldova, Georgia and Kyrgyzstan) based on a survey of 120 enterprises. The results indicate that non-oil multi-national enterprises (MNEs) are predominantly oriented at serving local markets. Most MNEs in the CIS operate as ‘isolated players’, maintaining strong links to their parent companies, while minimally cooperating with local CIS firms. The surveyed firms secure the majority of supplies from international sources. For this reason, the possibility for spillovers arising from cooperation with foreign-owned firms in the CIS is rather low at this time. The lack of efficiency-seeking investment poses further concern regarding the nature of FDI in the region. The most significant problems identified in the daily operations of the surveyed foreign firms are: the volatility of the political and economic environment, the ambiguity of the legal system and the high levels of corruption.

Keywords: FDI, CIS, industrial organization, investment motives

JEL Classification: F21, F23, L22, M15

Suggested Citation

Kudina, Alina and Jakubiak, Malgorzata, The Motives and Impediments to FDI in the CIS (April 21, 2009). CASE Network Studies and Analyses No. 370, Available at SSRN: https://ssrn.com/abstract=1392754 or http://dx.doi.org/10.2139/ssrn.1392754

Alina Kudina (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

CASE ( email )

Al. Jana Pawła II 61/212
Warsaw, 01-031
Poland

Malgorzata Jakubiak

CASE - Center for Social and Economic Research ( email )

Al. Jana Pawła II 61/212
Warsaw, 01-031
Poland

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