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Do National Borders Matter? Distance as FDI Determinant: The Case of Serbia

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The Political Economy of Development in Southeastern Europe

Part of the book series: Contributions to Economics ((CE))

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Abstract

The aim of this chapter is to define the meaning and the role of distance in determining cross-border investment transactions. Specifically it aims, using Serbia as an individual country case at demonstrating the implementation of a model based on Ghemawat’s cultural, administrative, geographic and economic (CAGE) distance framework for testing the key distance-related determinants of the foreign direct investment (FDI) inflows to a country. Since 2000 Serbia has embarked on an extensive political and economic reforms programme, having achieved democratic stability by now. Its economic growth has been mainly driven by foreign direct investments. This chapter analyses how each one of distance dimensions, i.e. cultural, administrative, geographic and economic, affects FDI inflows to Serbia. The empirical application of the model shows that cultural distance affects FDI flows negatively, while administrative, geographic and economic distance have a positive effect on FDI inflows to Serbia.

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Author information

Authors and Affiliations

  1. Department of Balkan, Slavic and Oriental Studies, University of Macedonia, Thessaloniki, Greece

    Dimitrios Kyrkilis & Natasa Grujic

Authors
  1. Dimitrios Kyrkilis
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  2. Natasa Grujic
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Corresponding author

Correspondence to Dimitrios Kyrkilis .

Editor information

Editors and Affiliations

  1. Department of International and European Studies, University of Piraeus, Piraeus, Greece

    Spyros Roukanas

  2. Department of Accounting and Finance, Technological Educational Institute of Central Macedonia, Serres, Greece

    Persefoni Polychronidou

  3. Eastern Macedonia and Thrace Institute of Technology, Kavala, Greece

    Anastasios Karasavvoglou

Appendix

Appendix

Table 1 Extraction method: principal component analysis
Full size table
Table 2 Panel regression: estimation by random effects
Full size table
Table 3 Panel regression: estimation by random effects
Full size table

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Kyrkilis, D., Grujic, N. (2018). Do National Borders Matter? Distance as FDI Determinant: The Case of Serbia. In: Roukanas, S., Polychronidou, P., Karasavvoglou, A. (eds) The Political Economy of Development in Southeastern Europe. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-93452-5_3

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