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The impact of globalization on FDIs: An empirical assessment for Central and Eastern European Countries

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  • Vechiu, Natalia
  • Kuikeu, Oscar

Abstract

This article analyzes the impact of economic integration under multilateral and preferential arrangements on relocation and welfare. Economic integration is measured by the reduction of interregional trade costs and by the reduction of communication costs between the headquarters and the production units of multinationals firms. We find that generally for high communication costs, industry relocates to the rich region and for low communication costs, to the developing regions, while the reduction of communication costs triggers industry relocation to the region reducing them. The numerical simulations are confirmed by an empirical analysis of the CEECs. Location determinants in these countries are low labour and communication costs. We also checked competition effects between recipient countries in terms of relative labour and communication costs and a significant impact only in terms of communication costs.

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  • Vechiu, Natalia & Kuikeu, Oscar, 2009. "The impact of globalization on FDIs: An empirical assessment for Central and Eastern European Countries," Conference papers 331877, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331877
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