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Privatisation and foreign direct investment in 10 transition countries

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  • Bruno Merlevede
  • Koen Schoors

Abstract

This article uses a partial adjustment framework to examine the determinants of FDI stocks of 'old' EU member states in 10 transition countries that have now joined the EU. A dynamic panel analysis reveals that equilibrium FDI stocks are determined by traditional variables such as market potential and unit labour costs. Adjustment towards equilibrium is rapid. The relationship between FDI and the privatisation process is complex. Whereas direct privatisation strategies positively affect the equilibrium FDI stock, non-direct privatisation schemes negatively affect the speed of adjustment towards the equilibrium. Privatisation history seems to increase equilibrium FDI stocks, independently of the method applied.

Suggested Citation

  • Bruno Merlevede & Koen Schoors, 2009. "Privatisation and foreign direct investment in 10 transition countries," Post-Communist Economies, Taylor & Francis Journals, vol. 21(2), pages 143-156.
    • Handle: RePEc:taf:pocoec:v:21:y:2009:i:2:p:143-156
    DOI: 10.1080/14631370902778450
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    References listed on IDEAS

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    1. Yuko Kinoshita & Nauro F. Campos, 2003. "Why Does Fdi Go Where it Goes? New Evidence From the Transition Economies," IMF Working Papers 2003/228, International Monetary Fund.
    2. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
    3. Nigel Pain & Dawn Holland, 1998. "The Diffusion Of Innovations In Central And Eastern Europe: A Study Of The Determinants And Impact O," National Institute of Economic and Social Research (NIESR) Discussion Papers 137, National Institute of Economic and Social Research.
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    Cited by:

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    2. Iwasaki, Ichiro & 岩﨑, 一郎 & Tokunaga, Masahiro, 2019. "The Determinants and Macroeconomic Impacts of Foreign Direct Investment in Transition Economies," CEI Working Paper Series 2019-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Masahiro Tokunaga & Ichiro Iwasaki, 2017. "The Determinants of Foreign Direct Investment in Transition Economies: A Meta-analysis," The World Economy, Wiley Blackwell, vol. 40(12), pages 2771-2831, December.
    4. Jude, Cristina, 2012. "FDI, Productivity and Wages. New Evidence from a Romanian Matched Sample," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 36-55, December.
    5. Mirel-Daniel Simionescu, 2017. "Determinants of Foreign Direct Investments in Bulgaria and Romania in the Context of Recent Economic Crisis," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(1), pages 68-72, March.
    6. Danai Christopoulou & Nikolaos Papageorgiadis & Chengang Wang & Georgios Magkonis, 2021. "IPR Law Protection and Enforcement and the Effect on Horizontal Productivity Spillovers from Inward FDI to Domestic Firms: A Meta-analysis," Management International Review, Springer, vol. 61(2), pages 235-266, April.
    7. Wattanadumrong, Bhagaporn & Collins, Alan & Snell, Martin C., 2014. "Taking the Thai trail: Attracting FDI via macro-level policy," Journal of Policy Modeling, Elsevier, vol. 36(6), pages 1135-1151.
    8. Tokunaga, Masahiro & Iwasaki, Ichiro, 2014. "Transition and FDI: A Meta-Analysis of the FDI Determinants in Transition Economies," RRC Working Paper Series 47, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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