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Decisive FDI barriers that affect multinationals' business in a transition country

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  • Aristidis Bitzenis

Abstract

Foreign Direct Investment (FDI) inflows are of crucial importance to the process of transition from a planned to a market economy for the Central and East European (CEE) countries in the global marketplace. This paper explores specific obstacles that foreign investors and foreign Multinational Enterprises (MNEs), from certain sectors and origin, faced during the establishment of their FDI projects in a transition country, such as Bulgaria. What is more, the degree to which these barriers have been considered by MNEs is evaluated, and special attention is given to the unstable Bulgarian legal framework, its corruption, briberies and bureaucratic procedures. The research data come from the author's questionnaire research, which was conducted in Bulgaria from the period mid-1998 until the end of 1999. Our questionnaire survey concluded that foreign MNEs looked upon bureaucratic or administrative issues and the regulatory environment, together with corruption, political and macroeconomic instability, as the most decisive barriers in their decision to undertake FDI projects in a Balkan country.

Suggested Citation

  • Aristidis Bitzenis, 2006. "Decisive FDI barriers that affect multinationals' business in a transition country," Global Business and Economics Review, Inderscience Enterprises Ltd, vol. 8(1/2), pages 87-118.
    • Handle: RePEc:ids:gbusec:v:8:y:2006:i:1/2:p:87-118
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    Citations

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    Cited by:

    1. Bruno Merlevede & Victoria Purice, 2014. "Distance, Time since Foreign Entry, and Knowledge Spillovers from Foreign Direct Investment," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/896, Ghent University, Faculty of Economics and Business Administration.
    2. Arslan, Ahmad & Tarba, Shlomo Y. & Larimo, Jorma, 2015. "FDI entry strategies and the impacts of economic freedom distance: Evidence from Nordic FDIs in transitional periphery of CIS and SEE," International Business Review, Elsevier, vol. 24(6), pages 997-1008.
    3. Eleftheria Koniari, 2016. "Determinants Of Greek Fdi Outflows In The Balkan Region The Case Of Greek Entrepreneurs In Bulgaria," Economics and Management, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 12(1), pages 33-44.
    4. Christian Hilber & Ioan Voicu, 2010. "Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 355-371.
    5. Joel I. Deichmann & Stephen Grubaugh & Patrick Scholten, 2022. "FDI propensity and geo-cultural interaction in former Yugoslavia: pairwise analysis of origin and destination countries," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 12(3), pages 479-505, September.
    6. Bitzenis, Aristidis & Tsitouras, Antonis & Vlachos, Vasileios A., 2009. "Decisive FDI obstacles as an explanatory reason for limited FDI inflows in an EMU member state: The case of Greece," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(4), pages 691-704, August.
    7. Omar Belkhodja, 2016. "FDI Location Decision: Evidence from Firms Investing in China," International Journal of Business and Management, Canadian Center of Science and Education, vol. 11(6), pages 1-47, May.
    8. Bruno Merlevede & Victoria Purice, 2016. "Distance, time since foreign entry, and productivity spillovers from foreign direct investment," Papers in Regional Science, Wiley Blackwell, vol. 95(4), pages 775-800, November.
    9. Naghshpour, Shahdad & Sergi, Bruno S., 2008. "The economics of international trade in south-eastern Europe," SEER Journal for Labour and Social Affairs in Eastern Europe, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 11(2), pages 199-218.
    10. Xu, WeiGuo & Hu, DaiPing & Lei, AiZhong & Shen, HuiZhang, 2008. "FDI chaos and control in China," Research in International Business and Finance, Elsevier, vol. 22(1), pages 17-28, January.

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