Marinov Marin - Foreign direct investment in Central and Eastern Europe

FOREIGN DIRECT INVESTMENT IN CENTRAL AND EASTERN EUROPE

Transition and Development

Series Editor: Professor Ken Morita
Faculty of Economics, Hiroshima University, Japan

The Transition and Development series aims to provide high quality research books that examine transition and development societies in a broad sense -including countries that have made a decisive break with central planning as well as those in which governments are introducing elements of a market approach to promote development. Books examining countries moving in the opposite direction will also be included. Titles in the series will encompass a range of social science disciplines. As a whole the series will add up to a truly global academic endeavour to grapple with the questions transition and development economies pose.

Also in the series:

Institutional Change in Transition Economies
Edited by Michael Cuddy and Ruvin Gekker
ISBN 0 7546 1977 X

The Social Impact of Informal Economies in Eastern Europe
Edited by Rainer Neef and Manuela Stanculescu
ISBN 0 7546 1950 8

Small Firms and Economic Development in Developed and Transition Economies: A Reader
Edited by David A. Kirby and Anna Watson
ISBN 0 7546 3060 9

Modeling Russias Economy in Transition
Peter Wehrheim
ISBN 0 7546 3299 7

Facilitating Transition by Internationalization Outward Direct Investment from Central European Economies
Edited by Marjan Svetlicic and Matija Rojec
ISBN 0 7546 3133 8

Enhanced Transition Through Outward Internationalization Outward FDI by Slovenian Firms
Andreja Jaklic and Marjan Svetlicic
ISBN 0 7546 3134 6

Foreign Direct Investment in Central and Eastern Europe

Edited by

SVETLA TRIFONOVA MARINOVA

University of Birmingham, United Kingdom

MARIN ALEXANDRO V MARINOV

University of Gloucestershire, United Kingdom

and

University of Umea, Sweden

First published 2003 by Ashgate Publishing

Reissued 2018 by Routledge

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Copyright Svetla Trifonova Marinova and Marin Alexandrov Marinov 2003

Svetla Trifonova Marinova and Marin Alexandrov Marinov have asserted their moral right to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act, 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Notice:

Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

Publishers Note

The publisher has gone to great lengths to ensure the quality of this reprint but points out that some imperfections in the original copies may be apparent.

Disclaimer

The publisher has made every effort to trace copyright holders and welcomes correspondence from those they have been unable to contact.

A Library of Congress record exists under LC control number: 2002038370

ISBN 13: 978-1-138-70758-0 (hbk)

ISBN 13: 978-1-315-19896-5 (ebk)

Contents

Marin Alexandrov Marinov and Svetla Trifonova Marinova

Shaukat Ali, Jan Nowak and Josef Pschl

Carl H. McMillan and Ken Morita

Alojzy Z. Nowak and Jeff Steagall

Svetla Trifonova Marinova and Marin Alexandrov Marinov

Nadiya Mankovska and James W. Dean

Kari Liuhto and Jari Jumpponen

Marin Alexandrov Marinov, Ken Morita and Svetla Trifonova Marinova

Refik Culpan and Emin Akcaoglu

Christos N. Pitelis

Marian Gorynia, Jan Nowak and Radoslaw Wolniak

Valeria Szekeres

Sonia Ferencikova

Inkeri Hirvensalo and Piia Heliste

Jarmo Nieminen

Zsuzsanna Vincze

Emin Akcaoglu, Ankara University, Turkey

Shaukat Ali, University of Wolverhampton, England

Refik Culpan, Pennsylvania State Universty, USA

James W. Dean, Simon Fraser University, USA

Sonia Ferencikova, University of Bratislava, Slovakia

Marian Gorynia, University of Poznan, Poland

Piia Heliste, Helsinki School of Economics, Finland

Inkeri Hirvensalo, Helsinki School of Economics, Finland

Jari Jumpponen, Lappeenranta University of Technology, Finland

Kari Liuhto, Lappeenranta University of Technology, Finland

Carl H. McMillan, Carleton University, Canada

Nadiya Mankovska, Institute for Economic Research, Ukraine

Marin Alexandrov Marinov, University of Gloucestershire, England

Svetla Trifonova Marinova, University of Birmingham, England

Ken Morita, Hiroshima University, Japan

Jarmo Nieminen, University of Sejnioki, Finland

Alojzy Z. Nowak, University of Warsaw, Poland

Jan Nowak, University of the South Pacific, Fiji Islands

Christos N. Pitelis, Cambridge University, England

Josef Pschl, Vienna Institute of International Economic Studies, Austria

Jeff Steagall, University of North Florida, USA

Valeria Szekeres, Ministry of Education, Hungary

Zsuzsanna Vincze, Turku School of Economics, Finland

Radoslaw Wolniak, University of Warsaw, Poland

MARIN ALEXANDROV MARINOV and SVETLA TRIFONOVA MARINOVA

Foreign direct investment (FDI) is a part of broader activities bringing internationalization and economic integration of businesses worldwide. Trade among nations dates from ancient times. In the recent historic past Dutch, English, French, Portuguese and Spanish firms promoted international trade in their overseas colonies. Gradually, those firms started establishing production facilities in home markets. These activities can be regarded as initial FDI undertakings. Contemporary FDI started in the early 1950s when multinational firms began creating production networks spreading all over the world.

While after World War II the industrialized world got involved in internationalizing activities through FDI, the countries of Central and Eastern Europe (CEE) were developing inward integration within the Council for Mutual Economic Assistance (CMEA) for both trade and investment activities. The economic climate in the CEE region changed after the fall of the Berlin Wall in 1989. Since then there has been a radical change in the flow of capital from developed countries towards countries of the former Soviet Bloc.

Transition CEE countries have adopted different approaches towards the creation and implementation of FDI policies and strategies. The Czech Republic, Estonia, Hungary and Poland, having appreciated FDI as a major stimulus to transition to market as well as a main boost to economic growth, have adopted open and facilitating inward FDI policies at various periods of their early transition to market. Simultaneously, a number of CEE countries started participating in outward FDI activities. In absolute terms Russia and Hungary are among the best performers in this respect (Marinov, 2002).

Taking the investors perspective, FDI has always been associated with the process of resolving a number of issues. The process of international capital flows is associated with the assumption of a certain degree of risk depending on the environmental characteristics, among others; political, economic, commercial, and financial. Drives that can motivate foreign investors to undertake FDI activities can fall into several categories (Dunning, 1993). They are