Foreign Aid and Foreign Direct Investment: Key Players in the Environmental Restoration of Central and Eastern Europe

31 Pages Posted: 6 Aug 2001

See all articles by Matthew R. Auer

Matthew R. Auer

Indiana University Purdue University Indianapolis (IUPUI)

Rafael Reuveny

Indiana University Purdue University Indianapolis (IUPUI) - School of Public and Environmental Affairs (SPEA); Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Date Written: July 2001

Abstract

For more than ten years, formerly centrally-planned economies of Central and Eastern Europe (CEE) have endeavoured to redress their environmental problems. For most CEE countries, the record of accomplishments is mixed. One of the least successful areas of reform has been cleanup and restoration of state-owned properties that were severely contaminated during the Communist era. In the early 1990s, concern was expressed that prospective foreign investors would shy away from these damaged properties for fear of incurring liabilities for cleanup and third party damages. The authors show that while aggregate levels of foreign direct investment (FDI) to CEE have not been greatly affected by environmental liability, prospective foreign purchasers have avoided investing in dirty industries and in sites harbouring serious contamination. To manage the cleanup of past pollution effectively, CEE governments must consider prospects for brownfields revitalisation. The authors have shown previously that the public resource requirements for brownfields revitalisation are impractical in the CEE context. In light of these constraints, in the near future, the most promising sources of financing for cleanup of past pollution are from external public actors. Several of these actors and their relevant programs are considered.

Suggested Citation

Auer, Matthew R. and Reuveny, Rafael, Foreign Aid and Foreign Direct Investment: Key Players in the Environmental Restoration of Central and Eastern Europe (July 2001). FEEM Working Paper No. 58.2001. Available at SSRN: https://ssrn.com/abstract=278811 or http://dx.doi.org/10.2139/ssrn.278811

Matthew R. Auer (Contact Author)

Indiana University Purdue University Indianapolis (IUPUI) ( email )

1309 E. 10th St.
Indianapolis, IN 47405
United States
(812) 855-4944 (Phone)
(812) 855-7802 (Fax)

Rafael Reuveny

Indiana University Purdue University Indianapolis (IUPUI) - School of Public and Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

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