Effect of Host Country Determinants and Institutional Quality on Outward Foreign Direct Investment from Central, Eastern and South-Eastern Europe

Safet Kurtović (), Nehat Maxhuni (), Blerim Halili () and Arta Maxhuni ()
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Safet Kurtović: University of Travnik Aleja
Nehat Maxhuni: University Union Nikola Tesla
Blerim Halili: University Union Nikola Tesla
Arta Maxhuni: Deloitte

Journal of the Knowledge Economy, 2024, vol. 15, issue 3, No 117, 13272-13308

Abstract: Abstract Over the past three decades, the countries of the Central, Eastern and South-Eastern Europe (CESEE) have achieved significant growth in terms of the volume of outward foreign direct investments (OFDI). Nonetheless, the effect of the host country location determinants and institutional quality on OFDI has not been examined sufficiently for these countries. The main objective of this study is to estimate the effect of the host country location determinants and institutional quality on OFDI from CESEE countries. This study is based on Dunning’s OLI paradigm and it has been expanded by addition of institutional theory. The empirical estimate is based on a sample of eight CESEE countries and a panel analysis for the period 2001–2021. The results of the estimate show that most of the location determinants (gross domestic product, technological assets and research and development) and all institutional determinants (government effectiveness, political stability and absence of violence/terrorism, control of corruption, regulatory quality, economic freedom, labour freedom, trade freedom and investment freedom) of the host country (in Europe, not the world) have a significant effect on OFDI from CESEE countries. It was also found that OFDI flows from these countries had mostly been motivated by efficiency-seeking and strategic asset-seeking.

Keywords: Determinants; Motives; Home country; Outward; FDI; Institution (search for similar items in EconPapers)
JEL-codes: F21 F23 H70 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s13132-023-01622-0

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