Regime Changes and FDI: A Tale of Two Countries – Poland and Israel

Assaf Razin and Cieślik, Andrzej
Authors registered in the RePEc Author Service: Andrzej Cieślik

No 19157, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This essay highlights the effects of radical transformations in the liberal characteristics of the regimes on foreign direct investors. To focus on the common patterns in the effects on foreign direct investment, of liberal vs. illiberal regime change, the essay spotlights the tale of two countries: Poland and Israel. The liberalization of the Polish economy and market reforms in the late 1980s and early 1990s boosted Poland's attractiveness to international companies. However, ra decade long of illiberal policies under the PiS regime has reduced Poland's appeal to foreign investors. Similarly, Israel's GNP and especially the high-tech sector saw significant growth from the 1990s to the 2010s, driven by liberalization of capital and finance surges, and the global IT boom immigration. Fundamental forces, such as the workforce skill boost, advances in education and research, Were crucial for Israel's high-tech industry development. As a more- or- -less a laboratory experiment for the real-economy impact of an abrupt transition to an illiberal regime, early steps of a comprehensive judicial overhaul have disrupted Israel's growth, causing a sharp decline in foreign direct investment.

Keywords: Foreign; direct; investment (search for similar items in EconPapers)
Date: 2024-06
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