Attraction of Foreign Direct Investments as a Challenge in Accession Process to European Union

Stanisic, Nenad and Jankovic, Nenad (2006): Attraction of Foreign Direct Investments as a Challenge in Accession Process to European Union. Published in: Regional Economic Cooperation in South Eastern Europe: Third International Conference of ASECU Proceedings (2006)

Abstract

When we speak about the significance of foreign direct investments (FDI) for the transition economies of Southeastern Europe, we mainly think of two important effects of FDI: effect on economic growth and effect on export performances. Both economic features (growth and export performance) are important for the transition economies in sense of European Union (EU) accession prospect. The experience of Central European countries, now members of European Union, shows that FDI inflows from EU countries were indicator of country’s reform progress. After short review of relevant researches, we analyzed the statistical relationship between FDI inflow and economic growth. Results don’t reveal any positive correlation between these two variables. However, FDI play important role in technology transfer and improve technological development level in transition economies. On the other hand, our research shows that FDI are correlated with improving of export’s structure of transition countries. FDI inflows in Central European countries were followed by changes of factorial intensity of export goods, as by sectoral structure of export, in positive manner. Compared with Central European transition countries, region of Southeastern Europe has less success in attracting FDI, which consequently results in weaker economic and export performances. FDI have an important role in export’s structure convergence between EU and transition countries.

• Item Type: MPRA Paper
• Institution: University of Kragujevac - Faculty of Economics
• Language: English
• Keywords: foreign direct investments; economic growth; export performance; transition economies
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

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