DOES QUALITY OF BUSINESS ENVIRONMENT INFLUENCE FOREIGN DIRECT INVESTMENT INFLOWS? A CASE OF CENTRAL EUROPEAN COUNTRIES.

Aneta Bobenič-Hintošová

Abstract

This paper investigates the effect of selected business environment indicators on FDI inflows in case of Visegrad countries for the period of 2005-2015. Based on correlation and regression analysis, it is concluded that the business environment matters significantly for FDI inflows, however the direction and strength of dependence differs according to analysed factors. On one hand we found that the better global competitiveness of the country the higher volume of inward FDI the country receives. On the other hand, economically more free country, which is more globalized, with better rating does not attract more FDI inflows, but rather the opposite. As expected, corruption of country is discouraging foreign investors from investing in Visegrad countries.

Keywords

business environment, foreign direct investments, globalization, ease of doing business, global competitiveness, economic freedom, rating, corruption perception index

Full Text:

References

Show references Hide references

[1] Bevan, A., Estrin, S. and Meyer, K.E., 2004. Institution building and the integration of Eastern Europe in international production. International Business Review, vol.13, no.1, pp.43-64, ISSN 0969-5931

[2] Casi, L., Resmini, L., 2012. Globalization, foreign direct investments and growth in European regions: An empirical assessment. In: Capello, R., Dentinho, T. P. (Ed.) Globalization Trends and Regional Development, Edward Elgar Publishing, 2012, p. 296, ISBN: 9781781003046

[3] Chang, C.-P., Lee, C.-C., 2011. The Effect of Globalization and Political Party on Economic Growth: Panel Data Analysis of Former Communist Countries and European OECD Members. Eastern European Economics, vol. 49, no. 6, 2011, pp. 5–26, ISSN 1557-9298, DOI: 10.2753/EEE0012-8775490601

[4] Corcoran, A., Gillanders, R., 2015. Foreign direct investment and the ease of doing business. Review of World Economics, vol. 151, no. 1, pp. 103-26, ISSN 1610-2878, DOI: 10.1007/s10290-014-0194-5

[5] Elmawazini, K., Sharif, A., Manga, P., Drucker, P. 2013. Trade Globalization, Financial Globalization and Inequality Within South-East Europe and CIS Countries. The Journal of Developing Areas, vol. 47, no. 2, pp. 303-317, ISSN 0022-037X, DOI: 10.1353/jda.2013.0030

[6] Elsherif, M. A., 2016. The impact of globalization on economic conditions: empirical evidence from the Mena region. International Journal of Business and Economic Development, vol. 4, no. 1, pp. 1-14, ISSN 2051-8498

[7] Gani, A., Al-Abri, A. S., 2013. Indicators of business environment, institutional quality and foreign direct investment in Gulf Cooperation Council countries. Internation Review of Applied Economics, vol. 27, no. 4, pp. 515-530, ISSN 0269-2171, DOI: 10.1080/02692171.2012.760066

[8] Globerman, S., Shapiro, D., 2003. Governance infrastructure and US foreign direct investment. Journal of International Business Studies, vol. 34, no. 1, pp. 19-39. ISSN 1478-6990, DOI: 10.1057/palgrave.jibs.8400001

[9] Gurgul, H., Lach, L. 2014. Globalization and economic growth: Evidence from two decades of transition in CEE. Economic Modelling, vol. 36, pp. 99-107, ISSN 0264-9993, DOI: 10.1016/j.econmod.2013.09.022

[10] Henisz, W., 2003. The power of the Buckley and Casson thesis: the ability to manage institutional idiosyncracies. Journal of International Business Studies, vol. 34, no. 2, pp. 173-184, ISSN 1478-6990, DOI: 10.1057/palgrave.jibs.8400015

[11] Pekarskiene, I., Susniene, R., 2015 Features of foreign direct investment in the context of globalization. Procedia - Social and Behavioral Sciences, no. 213, pp. 204 – 210, ISSN 1877-0428

[12] Prime, P. B., Subrahmanyam, V., Lin, C. M., 2012. Competitiveness in India and China: The FDI puzzle. Asia Pacific Business Review, vol. 18, no. 3, pp. 303-333, ISSN 1360-2381, DOI: 10.1080/13602381.2011.605673

[13] Sambharya, R. B., Rasheed, A. A., 2015. Does economic freedom in host countries lead to increased foreign direct investment? Competitiveness Review, vol. 25, no. 1, pp. 2-24, ISSN 1059-5422, DOI: 10.1108/CR-05-2013-0047

[14] Swiss Federal Institute of Technology Zurich. KOF Index of Globalization. Updated [cit. 15/10/2016] Available from: http://globalization.kof.ethz.ch/

[15] Šimelyté, A., Liučvaitiené, A., 2012. Foreign direct investment policy-friendly business environment in R&D sectors: Baltic states versus Visegrad countries. Journal of East-West Business, vol. 18, no. 1, pp. 66-93, ISSN 1066-9868, DOI: 10.1080/10669868.2012.663737

[16] The Heritage Foundation. Index of Economic Freedom. Updated [cit. 15/10/2016]. Available from: http://www.heritage.org/index/download

[17] The World Bank. Doing Business. Updated [cit. 15/10/2016]. Available from: http://www.doingbusiness.org/reports/global-reports/doing-business-2015

[18] The World Economic Forum. The Global Competitiveness Report. Updated [cit. 15/10/2016] Available from: http://reports.weforum.org/global-competitiveness-report-2014-2015/

[19] Transparency International. Corruption Perception Index. Updated [cit. 15/10/2016] Available from: http://www.transparency.org/research/cpi/overview

[20] Vetter, S. 2014. Recent Trends in FDI Activity in Europe. Deutsche Bank Research, pp. 1-11, ISSN 2193-5963

[21] Wei, S.J., 2000. How taxing is corruption on international investors? The Review of Economics and Statistics, vol. 82, no. 1, pp. 1-11, ISSN 1530-9142, DOI: 10.1162/003465300558533

[22] Wei, S. Z. C., Zhu, Z., 2007. A revisit to the outward FDI determinants: further evidence from count panel data models with fixed effects. Applied Economics Letters, vol. 14, no. 11, pp. 809-812, ISSN 1350-4851, DOI: 10.1080/13504850600689923

[23] Witkowska, J., 2007. Foreign direct investments in the changing business environment of the European Union´s new member states. Global Economy Journal, vol. 7, no. 4, pp. 1-32, ISSN 1524-5861, DOI: 10.2202/1524-5861.1233

[24] Yang, J. Y., Lu, J., Jiang, R. 2016. Too Slow or Too Fast? Speed of FDI Expansions, Industry Globalization, and Firm Performance. Long Range Planning, vol. 50, no. 1, pp. 1-20, ISSN 0024-6301

[25] Zhao, J.H., Kim, S.H., Du, J. 2003. The impact of corruption and transparency on foreign direct investment. Management International Review, vol. 43, no. 1, pp. 41-62, ISSN 1861-8901

https://doi.org/10.5817/CEJM2016-1-1


Copyright (c) 2017 Aneta Bobenič-Hintošová

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.