Theoretical Foundations

  • Hanna Makhavikova
Part of the Contributions to Economics book series (CE)


This chapter provides basic information on the subject. After providing the basic concepts of FDI in the first section of the chapter, we analyse the key characteristics of FDI inflows to the region in the second section. Here we consider the FDI inflow trends in the region. We mostly explore the reports of international organisations, such as the United Nations Organisation, the World Bank, OECD, the International Monetary Fund etc. In the third part we provide an overview of the main empirical literature on FDI in CEE and its main limitations. In the fourth part we examine the gradual integration of CEE countries into the European Union, changes that occurred in the political and economic domain that stimulated an increase in FDI inflows.


  1. Albi A (2005) EU enlargement and the constitutions of Central and Eastern Europe. Cambridge University Press, Cambridge. ISBN: 9780521607360. Scholar
  2. Albulescu CT, Briciu L, Coroiu SI (2010) Determinants of foreign direct investment in CEECs: the role of financial stability. Analele Stiintifice ale Universitatii “Alexandru Ioan Cuza” din Iasi—Stiinte Economice 2010:85–96 Scholar
  3. Altenburg T (2000) Linkages and spill-overs between transnational corporations and small and medium-sized enterprises in developing countries: opportunities and policies. German Development Institute, Berlin. ISBN: 3-88985-217-3. Scholar
  4. Altomonte C (1998) FDI in the CEEC’s and the theory of real options: an empirical assessment.
  5. Altomonte C, Guagliano C (2001) Competing locations? Market potential and FDI in Central and Eastern Europe vs the Mediterranean.
  6. Altomonte C, Guagliano C (2003) Comparative study of FDI in Central and Eastern Europe and the Mediterranean. Econ Syst 27(2):223–246CrossRefGoogle Scholar
  7. Ash TN, Hare PG (1994) Privatisation in the Russian federation: changing enterprise behaviour in the transition period. Camb J Econ 18(6):619–634 Scholar
  8. Assenov I (2003) Market reforms and foreign investment: what drives capital flows to transition economies? Ōsaka-Daigaku-keizaigaku 53(1):99–118Google Scholar
  9. Baldwin RE (1994) Towards an integrated Europe. Centre for Economic Policy Research, London. ISBN: 1898128138Google Scholar
  10. Bellak C, Leibrecht M (2007) How to make FDI in Central and Eastern European countries sustainable. In: Liebscher K, Christl J, Mooslechner P, Ritzberger-Grünwald D (eds) Foreign direct investment in Europe. Edward Elgar, Cheltenham. ISBN: 9781847208798Google Scholar
  11. Benacek V, Gronicki M, Holland D, Sass M (2000) The determinants and impact of foreign direct investment in Central and Eastern Europe: a comparison of survey and econometric evidence. Transl Corp 9(3):163–212 Scholar
  12. Bengoa M, Sanchez-Robles B (2003) Foreign direct investment, economic freedom and growth: new evidence from Latin America. Eur J Polit Econ 19(3):529–545CrossRefGoogle Scholar
  13. Bevan AA, Estrin S (2000) The determinants of foreign direct investment in transition economies, 2638Google Scholar
  14. Bevan AA, Estrin S (2004) The determinants of foreign direct investment into European transition economies. J Comp Econ 32(4):775–787CrossRefGoogle Scholar
  15. Blanchard O (1998) The economics of post-communist transition. Clarendon Press (Clarendon lectures in economics), OxfordCrossRefGoogle Scholar
  16. Binici M, Schindler M, Hutchison MM (2009) Controlling capital? Legal restrictions and the asset composition of international financial flows. International Monetary Fund, Washington, DC (IMF working papers, Working paper no. 09/208). Online verfügbar unter. Scholar
  17. B­hn A (ed) (1994–1996) Privatization in central and Eastern Europe. Annual conference series. CEEPN, Ljubjana, pp 5–7Google Scholar
  18. Böhm A, Simoneti M (eds) (1993) Privatization in central and Eastern Europe. Annual conference series. CEEPN, Ljubjana, p 4Google Scholar
  19. Bos J, van de Laar M (2004) Explaining foreign direct investment in Central and Eastern Europe: an extended gravity approach, 8Google Scholar
  20. Botrić V, Škuflić L (2006) Main determinants of foreign direct investment in the southeast European countries. Transit Stud Rev 13(2):359–377CrossRefGoogle Scholar
  21. Brada JC (1996) Privatization is transition. Or is it? J Econ Perspect 1996(2):67–86CrossRefGoogle Scholar
  22. Brada JC, Kutan AM, Yigit TM (2003) The effects of transition and political instability on foreign direct investment: Central Europe and the Balkans.
  23. Brada JC, Kutan AM, Yigit TM (2006) The effects of transition and political instability on foreign direct investment inflows. Econ Transit 14(4):649–680CrossRefGoogle Scholar
  24. Brenton P (1999) Removing obstacles to deeper economic integration in the broad European trade area: Report of the CEPS working party on trade and investment in an enlarging Europe. CEPS, Brussels. ISBN: 9290792574Google Scholar
  25. Brenton P, DiMauro F, Lücke M (1998) Economic integration and FDI: an empirical analysis of foreign investment in the EU and in Central and Eastern Europe.
  26. Brewer TL, Young S (2000) The multilateral investment system and multinational enterprises. Oxford University Press, Oxford. ISBN: 9780198293156Google Scholar
  27. Campos FN (2000) Context is everything. Measuring institutional change in transition economies. The World Bank, Washington, DC. Online verfügbar unter Scholar
  28. Campos NF, Kinoshita Y (2002) Foreign direct investment as technology transferred. Some panel evidence from the transition economies. Manch Sch 70(3):398–419CrossRefGoogle Scholar
  29. Carstensen K, Toubal F (2004) Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis. J Comp Econ 32(1):3–22CrossRefGoogle Scholar
  30. Chaudhuri S, Mukhopadhyay U (2014) Foreign direct investment in developing countries: a theoretical evaluation. Springer, New Delhi. ISBN: 978-81-322-1897-5CrossRefGoogle Scholar
  31. Clark D (1997) Enlargement and integration of the European Union: issues and strategies. Routledge, London. ISBN: 0203195876. Scholar
  32. Clausing K, Dorobantu C (2005) Re-entering Europe: does European Union candidacy boost foreign direct investment? Econ Transit 13(1):77–103 Scholar
  33. COMM/PRESS/01 (2015) European Commission – Press release – The DCFTA Facilities for SMEs. Accessed 05 Nov 2016
  34. Commission of the European Communities (1997) Agenda 2000. Commission of the European Communities, Luxembourg, (97) 2000 finalGoogle Scholar
  35. Commission of the European Communities (2003) Report from the Commission. The stabilisation and association process for South East Europe Second Annual Report. Commission of the European CommunitiesGoogle Scholar
  36. de Melo M, Denizer C, Gelb AH (1996) From plan to market: patterns of transition. World Bank, Policy Research Department, Transition Economics Division, Washington, DCGoogle Scholar
  37. Declaration № 142-Н 1991 of the Soviet of the Republics of the Supreme Soviet of the Soviet Union.
  38. Demekas DG, Horváth B, Ribakova E, Wu Y (2005) Foreign direct investment in Southeastern Europe; How (and how much) can policies help?
  39. Dunning JH (1973) The determinants of international production. Oxf Econ Pap 25(3):289–336 Scholar
  40. Dunning JH (1993) Multinational enterprises and the global economy. Addison-Wesley, Wokingham. ISBN: 0201175304Google Scholar
  41. Dunning JH, McQueen M (1981) The eclectic theory of international production: a case study of the international hotel industry. Manag Decis Econ 2(4):197–210CrossRefGoogle Scholar
  42. EBRD (2000) Transition report 2000. Employment, skills and transition. European Bank for Reconstruction and Development, LondonGoogle Scholar
  43. EBRD (2001) Energy in transition. Europ. Bank for Reconstruction and Development, London (Transition report, 8.2001)Google Scholar
  44. Egger P, Pfaffermayr M (2004) Foreign direct investment and European integration in the 1990s. World Econ 27(1):99–110 Scholar
  45. El-Kady H, Zimny Z (2009) The role of international investment agreements in attracting foreign direct investment to developing countries. United Nations, New York. United Nations Conference on Trade and Development. ISBN: 9789211127812. Scholar
  46. Estrin S (1994) Privatisation in the transitional economies of Central and Eastern Europe: issues and progress. Bus Strateg Rev 5(4):81–96CrossRefGoogle Scholar
  47. Estrin S, Meyer KE (2011) Foreign direct investment in transition economies. Strengthening the gains from integration. In: Globalization and economic diversification: policy challenges for economies in transition. Bloomsbury Academic, London, pp 155–177. ISBN: 978-1-8496-6532-2Google Scholar
  48. Estrin S, Uvalic M (2013) Foreign direct investment into transition economies: are the Balkans different? London School of Economics (LSE) ‘Europe in Question’ seriesGoogle Scholar
  49. European Commission (ed) (2002) STATISTICAL ANNEX of European economyGoogle Scholar
  50. European Commission (2015) Enlargement: extending European values and standards to more countries. Publications Office, Luxembourg. ISBN: 978-92-79-49209-9Google Scholar
  51. European Commission (2016a) European neighbourhood policy and enlargement negotiations.
  52. European Parliament (1993) European Council in Copenhagen. Accessed 17 April 2002
  53. European Parliament (1999) Briefing no 38: The role of the European parliament in the enlargement process.
  54. Faeth I (2009) Determinants of foreign direct investment—A tale of nine theoretical models. J Econ Surv 23(1):165–196CrossRefGoogle Scholar
  55. Fiscal Affairs Department (2005) Issues with taxation in the enlarged EU. International Monetary Fund, Washington, DCGoogle Scholar
  56. Garibaldi P, Mora N, Sahay R, Zettelmeyer J (2002) What moves capital to transition economies? IMF, Washington, DC (IMF working paper, 02/64)Google Scholar
  57. Grabbe H (1999) A partnership for accession? The implications of EU conditionality for the Central and East European applicants. Robert Schuman Centre, European University Institute, San DomenicoGoogle Scholar
  58. Grcic B, Babic Z (2003) The determinants of FDI: evaluation of transition countries attractiveness for foreign investorsGoogle Scholar
  59. Gungor H, Binatli AO (2010) The effect of European accession prospects on foreign direct investment flows.
  60. Hengel E (2011) Determinants of FDI location in South East Europe (SEE). OECD J Gen Pap 2010(2):91–104CrossRefGoogle Scholar
  61. Holland D, Pain N (1998) The determinants and impact of foreign direct investment in the transitionGoogle Scholar
  62. Hunya G (2000) Recent FDI trends, policies and challenges in South-East European countries. Wiener Institut für Internationale Wirtschaftsvergleiche, ViennaGoogle Scholar
  63. ILO (2016) ILO database of labour statistics: mean nominal monthly earnings of employees.
  64. International Monetary Fund (2005) Balance of payments manual. International Monetary Fund, Washington, DC. ISBN: 9781557753397. Scholar
  65. International Monetary Fund and Organisation for Economic Co-operation and Development (2010) Foreign direct investment statistics: how countries measure FDI 2001. International Monetary Fund, Washington, DC. ISBN: 1-58906-220-5. Scholar
  66. Janicki HP, Wunnava PV (2004) Determinants of foreign direct investment: empirical evidence from EU accession candidates. Appl Econ 36(5):505–509CrossRefGoogle Scholar
  67. Johnson A (2006) The effects of FDI inflows on host country economic growth. Working paper series in economics and institutions of innovation. Royal Institute of Technology, CESIS – Centre of Excellence for Science and Innovation Studies, p 58. Online verfügbar unter
  68. Kalotay K, Hunya G (2000) Privatization and FDI in Central and Eastern Europe. Transl Corp 9(1):39–66Google Scholar
  69. Kinoshita Y (2011) Sectoral composition of foreign direct investment and external vulnerability in Eastern Europe. International Monetary Fund, Washington, DC (IMF working papers, working paper No. 11/123). Online verfügbar unter Scholar
  70. Kinoshita Y, Campos N (2003) Why does FDI go where it goes? New Evidence from the transition economies. IMF Working Papers. International Monetary Fund (03/228).
  71. Lankes H-P, Venables AJ (1996) Foreign direct investment in economic transition: the changing pattern of investments. Econ Transit 4(2):331–347CrossRefGoogle Scholar
  72. Lansbury M, Pain N, Šmídková K (1996) Foreign direct investment in Central Europe since 1990: an econometric study. Natl Inst Econ Rev 156(1)Google Scholar
  73. Marinova ST, Marinov MA (2003) Foreign direct investment in Central and Eastern Europe. Ashgate Publishing Group, Aldershot. ISBN: 9780754630265Google Scholar
  74. Mateev M (2009) Determinants of foreign direct investment in Central and Southeastern Europe: new empirical tests. Oxf J Spl Issue 8(1):133–149 Scholar
  75. Medvedev D (2006) Preferential trade agreements and their role in world trade. World Bank Development Prospects Group, Washington, DC (Policy research working paper, 4038)CrossRefGoogle Scholar
  76. Merlevede B, Schoors K (2004) Reform, FDI and economic growth: tale of the tortoise and the hare. William Davidson Institute, Ann Arbor, MI Scholar
  77. Meyer K (1998) Direct investment in economies in transition. University, Dissertation – London. Elgar, Cheltenham. ISBN: 978 1 85898 736 1Google Scholar
  78. OECD (2009) OECD benchmark definition of foreign direct investment 2008. Organisation for Economic Co-operation and Development, Paris. ISBN: 9789264045743. Scholar
  79. Resmini L (2000) The Determinants of foreign direct investment in the CEECs: new evidence from sectoral patterns. Econ Transit 8(3):665–689CrossRefGoogle Scholar
  80. Ribakova E, Horváth B, Demekas DG, Wu Y (2005) Foreign direct investment in Southeastern Europe. How (And how much) can policies help? International Monetary Fund, Washington, DC (IMF working papers, Working paper no. 05/110). Online verfügbar unter Scholar
  81. Rodin S (2001) Requirements of EU membership and legal reform in Croatia. Politička misao XXXVIII(5):87–105Google Scholar
  82. Sapienza E (2009) FDI and growth in Central and Southern Eastern Europe.
  83. Seric A (2011) Determinants of FDI location in Central and Eastern Europe (CEE). OECD J Gen Pap 2010(2):77–90CrossRefGoogle Scholar
  84. Shenkar O, Luo Y (2004) International business. Recording for the Blind & Dyslexic, Princeton, NJGoogle Scholar
  85. Shiells CR (2003) FDI and the investment climate in the CIS countries.
  86. Stern N (1997) The transition in Eastern Europe and the former Soviet Union: some strategic lessons from the experience of 25 countries over six yearsGoogle Scholar
  87. Tintin C (2011) Do institutions matter for FDI? Evidence from Central and Eastern European countries. In: Proceedings of ETSG 2011Google Scholar
  88. Tondel L (2001) Foreign direct investment during transition: determinants and patterns in Central and Eastern Europe and the former Soviet Union. Chr. Michelsen Institute, Development Studies and Human Rights, Bergen. ISBN: 9788290584936Google Scholar
  89. UNICEF (2001) A decade of transition. The MONEE project; CEE, CIS, Baltics. UNICEF Innocenti Research Centre, Florence (Regional monitoring report, 8)Google Scholar
  90. UNCTAD (1994) World investment report: transitional corporations, employment and the workplace. ISBN: 9211044359Google Scholar
  91. UNCTAD (1999) Foreign direct investment and the challenge of development. United Nations, New York. ISBN: 92-1-112440-9Google Scholar
  92. UNCTAD (2003) World investment report: FDI policies for development: national and international perspectives. United Nations, New York. ISBN: 92-1-112580-4Google Scholar
  93. UNCTAD (2004) World investment report: the shift towards services. United Nations, New York. ISBN: 92-1-112644-4Google Scholar
  94. UNCTAD (2009a) UNCTAD training manual on statistics for FDI and the operations of TNCs. United Nations, New York. ISBN: 978-92-1-112766-9. Scholar
  95. UNCTAD (2009b) World investment report: transnational corporations, agricultural production and development. United Nations, New York. ISBN: 978-92-1-112775-1Google Scholar
  96. UNCTAD (2014a) Bilateral FDI statistics. Accessed 03 Nov 2016
  97. UNCTAD (2014b) World investment report: investing in the SDGs: an action plan. United Nations, New York. ISBN: 978-92-1-112873-4Google Scholar
  98. UNCTAD (2015) World investment report: reforming international investment governance. United Nations, New York. ISBN: 978-92-1-112891-8Google Scholar
  99. UNCTAD (2016a) Investor nationality: policy challenges. United Nations, New York. ISBN: 978-92-1-112902-1Google Scholar
  100. UNCTAD (2016b) UNCTADstat: Foreign direct investment: inward and outward flows and stock, annual, 1970–2015 Table summary.
  101. UNCTAD (2016c) UNCTADstat: Gross domestic product: total and per capita, current and constant (2005) prices, annual, 1970–2015.
  102. UNCTAD (2016d) UNCTADstat: Total and urban population, annual, 1950–2050.
  103. Wacker KM (2013) On the measurement of foreign direct investment and its relationship to activities of multinational corporations.
  104. WIIW (ed) (2001) WIIW handbook of statistics. Countries in transition. Vienna Institute for International Economic Studies, ViennaGoogle Scholar
  105. Witkowska J (2007) Foreign direct investment in the changing business environment of the European Union’s new member states. Glob Econ J 7(4):1–30. Scholar
  106. Witkowska J (2008) The role of foreign direct investor policies in creating a knowledge—Based economy in the new member states of the European Union. Compar Econ Res: Central and Eastern Europe 11(3):53–72Google Scholar
  107. Woodward DP (2000) Taxation and the location of foreign direct investment in Central Europe. In: The new world order: internationalism, regionalism and the multinational corporations. Pergamon, Amsterdam, pp 192–208Google Scholar
  108. Yeyati EL, Stein E, Daude C (2003) Regional integration and the location of FDI. Inter-American Development Bank Research Department, Washington, DC Scholar

Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Hanna Makhavikova
    • 1
  1. 1.Faculty of Economics and ManagementOtto-von-Guericke University MagdeburgMagdeburgGermany

Personalised recommendations