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Determinants of Foreign Direct Investment in Serbia: Is the Concept of Distance Relevant?

  • Natasa Grujic
  • Dimitrios Kyrkilis
Chapter
Part of the Palgrave Studies of Internationalization in Emerging Markets book series (PSIEM)

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 a transition country, i.e. Serbia as a case study, at demonstrating the implementation of a model based on Ghemawat’s culture, administrative, geographic, and economic distance framework modified by substituting administrative by institutional distance for testing the relevance of distance in determining Foreign Direct Investment (FDI) inflows to a country. In addition, this chapter also illustrates how each of the above distance dimensions, i.e. cultural, institutional, geographic and economic, correlates with FDI at different industries categorised by technological level in manufacturing, i.e. high technology, medium high technology, medium-low technology, low technology subsectors, and in services sectors, i.e. low knowledge intensive and high knowledge intensive service sectors. With the exception of institutional distance the remaining distance dimensions, i.e. cultural, geographic and economic follow Ghemawat (Harvard Business Review 79:137–147, 2001) propositions. Therefore, the “CAGE distance framework” in this research is being transformed into “CIGE distance framework”.

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Copyright information

© The Author(s) 2020

Authors and Affiliations

  • Natasa Grujic
    • 1
  • Dimitrios Kyrkilis
    • 1
  1. 1.Department of Balkan, Slavic and Oriental StudiesUniversity of MacedoniaThessalonikiGreece

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