Foreign Investments and Institutional Convergence in Southeastern Europe

Eleni A. Kaditi

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: Foreign investments are in the focus of most governments around the world. In order to be able to set a policy agenda which is successful in promoting FDI, it is necessary to understand their determinants. This paper examines whether and to what extent sound institutions and the degree of regulation deter or attract FDI flows in four economies of Southeastern Europe. In a dynamic panel analysis, a broad set of institutional and regulatory variables that may affect the decision of foreign investors to undertake investment projects in this region is examined, using firm-level data. Analysis shows that the quality of the institutional environment significantly influences foreign capital. Governments in this region should, therefore, focus primarily on creating a good legal system, having relatively stable political and economic conditions.

Keywords: Foreign Investments; Corruption; Transition Economies (search for similar items in EconPapers)
JEL-codes: D73 F23 P3 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-eur, nep-reg and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:26010

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