Macro-level determinants of foreign direct investment in Central and Eastern Europe

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Orasanu, Alina Simona

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University of Guelph

Abstract

This thesis is an investigation of the macroeconomic, social and political host country characteristics that influence foreign direct investment (FDI) in the transition economies of Central and Eastern Europe. A regression analysis is conducted on 1990-1997 data for ten transition economies, in order to assess the impact of market, socio-economic development and risk variables on the amount of FDI attracted. The results indicate that market growth and socio-economic development are the best predictors of FDI inflows into transition economies. Detailed results on the impact of various market and socio-economic indicators on FDI are reported and implications for both Central and Eastern European governments and companies investing in the region are discussed.

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Keywords

foreign direct investment, macro-level determinants, Central Europe, Eastern Europe, market growth

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