How to Catch Foreign Fish? FDI and Privatization in EU Accession Countries

Bruno Merlevede and Koen Schoors

No wp785, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: We examine the determinants of FDI stocks of ‘old’ EU-members in ten accession countries. Our partial adjustment framework results in a dynamic panel data analysis. In addition to the traditional variables, such as market potential and unit labour costs, we find institutional development to be a robust determinant of equilibrium FDI stocks. The adjustment towards equilibrium is rapid. The relationship between FDI and the privatization process is complex. Non-direct privatization schemes negatively affect the speed of adjustment, whereas direct privatization strategies positively affect the equilibrium itself. Privatization history increases equilibrium FDI stocks, independently of the method applied.

Keywords: foreign direct investment; privatisation; partial adjustment (search for similar items in EconPapers)
JEL-codes: F20 F23 P33 (search for similar items in EconPapers)
Pages: pages
Date: 2005-08-01
New Economics Papers: this item is included in nep-eec and nep-tra
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Citations: View citations in EconPapers (13)

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Working Paper: How to Catch Foreign Fish? FDI and Privatisation in EU Accession Countries (2005)
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