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The Effects of Transition and Political Instability On Foreign Direct Investment Inflows: Central Europe and the Balkans

Josef Brada (), Ali Kutan () and Taner Yigit ()

No wp729, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper examines the effect of transition and of political instability on FDI flows to the transition economies of Central Europe, the Baltics and the Balkans. We find that FDI to transition economies unaffected by conflict and political instability exceed those that would be expected for comparable West European countries. Success with stabilization and reform tends to increase FDI inflows. In the case of Balkan counties, conflict and instability have reduced FDI inflows below what one would expect for comparable West European countries, and reform and stabilization failures have further reduced FDI to the region. Thus the economic costs of instability in the Balkans have been quite high.

Keywords: foreign direct investment; transition; political instability; political risk (search for similar items in EconPapers)
JEL-codes: F21 F23 P52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa and nep-tra
Date: 2004-11-01
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Working Paper: The effects of transition and political instability on foreign direct investment inflows: Central Europe and the Balkans (2004) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2004-729

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