Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/121192 
Authors: 
Year of Publication: 
2008
Series/Report no.: 
FIW-Research Reports No. 010
Publisher: 
FIW - Research Centre International Economics, Vienna
Abstract: 
Austrian foreign direct investment (FDI) increased quickly since 1992. The profitability of these investments did improve over the full period under consideration (1992 to 2005). In particular investments in Central and Eastern Europe became rather profitable. In 2005 total annual profits translate into an average return on equity (RoE) of 8.3%. However, returns differ to a large extent by regions. They are 5.1% and 9.7% for EU-14 and for CEE-5 respectively. The age of investment is the main determinate of profitability. Interestingly, there are strong differences between Greenfield investments and M&As. While the latter are always more profitable in EU-15 this is not the case for affiliates in CEE. In these countries we can observe a time-dependent development. During the first years of investments M&A are more profitable than Greenfield investments. However, the latter become more rewarding by older vintages. We further examine if profits are either reinvested (and thereby contribute to the existing stock of capital in the host country) or repatriated (and thereby improve the performance of home countries). The paper shows that patterns differ substantially by countries and over time. The share of reinvestment is much higher in CEE than in EU-15. Moreover, M&A show much higher rates of repatriation than Greenfield investments independent of host countries.
Subjects: 
Foreign direct investment
profitability
EU enlargement
greenfield investment and M&As
Document Type: 
Research Report

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.