Why Does FDI Go Where it Goes? New Evidence from the Transitional Economies

Yuko Kinoshita and Nauro Campos

No 3984, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper examines the importance of agglomeration economies and institutions vis-Ã -vis initial conditions and factor endowments in explaining the locational choice of foreign investors. Using a unique panel data set for 25 transition economies between 1990-98, we find that the main determinants are institutions, agglomeration and trade openness. We find important differences between the Eastern European and Baltic countries, on the one hand, and the former Soviet Union countries on the other: in the latter group, natural resources and infrastructure matter, while agglomeration matters only for the former group.

Keywords: Foreign direct investment; Transition economies (search for similar items in EconPapers)
JEL-codes: C33 F21 O16 O23 P27 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-dev and nep-ifn
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Citations: View citations in EconPapers (199)

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Working Paper: Why Does Fdi Go Where it Goes? New Evidence From the Transition Economies (2003)
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