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Multinational companies from transition economies and their outward foreign direct investment

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  • Wladimir Andreff

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne)

  • Madeleine Andreff

    (UPEM - Université Paris-Est Marne-la-Vallée)

Abstract

Multinational companies (MNCs) based in 26 post-communist transition economies (PTEs) emerged during the 1990s. Their outward foreign direct investment (OFDI) boomed dramatically from 2000 to 2007 in these countries, and then muddled through the financial crisis and great recession at difference paces on different paths. This difference is revealed in a sample of 15 PTEs for which data are available from 2000 to 2015. Most of these economies appear to be on the brink of moving from the second to the third stage of Dunning's investment development path. The geographical distribution of their OFDI favors host countries located in other PTEs, developed market economies, and tax havens while their industrial structure is more concentrated on services rather than on manufacturing and the primary sector. PTE-based MNCs primarily adopt a strategy of market-seeking OFDI. Econometric testing shows that push factors are major determinants of OFDI. The results demonstrate that OFDI is determined by the home country's level of economic development, the size of its home market, and its rate of growth as well as technological variables: OFDI decreases with an increase in the number of scientists in the home economy and with an increase in the share of high-tech products in overall exports, exhibiting a negative technological gap. A lagged relationship between OFDI and previous inward FDI suggests that Mathews' linkage-leverage-learning theory is relevant in the case of PTEs.

Suggested Citation

  • Wladimir Andreff & Madeleine Andreff, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03207032, HAL.
    • Handle: RePEc:hal:cesptp:hal-03207032
    DOI: 10.1016/j.ruje.2017.12.008
    Note: View the original document on HAL open archive server: https://hal.science/hal-03207032
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    References listed on IDEAS

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