Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/121201
Authors: 
Bellac, C.
Leibrecht, M.
Stehrer, Robert
Year of Publication: 
2008
Series/Report no.: 
FIW Research Reports 019
Abstract: 
This paper analyzes policies to attract Foreign Direct Investment (FDI) based on a sample comprising the US plus six EU countries (US-plus-EU-6) and four Central and Eastern European Countries (CEEC-4). The analysis draws on industry-level data for 1995-2003. A Dynamic Panel Data approach is used to isolate important country- and industry-level determinants of FDI inward stock. The estimated baseline model derived is used to assess the scope for FDI attraction policies. The scope for FDI is defined as the difference between the FDI inward stock received by a country-industry-pair, as implied by the baseline model ("estimated FDI"), and the inward FDI stock which could be realized if a certain "best practice" policy were carried out ("potential" FDI). The results show how different policy variables contribute to closing the gap between estimated and potential FDI. The countries in our sample fall into two groups: In the CEEC-4 an increase of R&D expenditures in GDP would result in a substantial increase in FDI, while in the US-plus-EU-6 an improvement of their unit labor cost position, e.g. via increases in labor productivity, and improvements in their tax position would attract additional FDI.
Subjects: 
Economic Policy
Foreign Direct Investment
European Union
Industry-level Study
Location Decision
JEL: 
F21
H25
H71
Document Type: 
Research Report

Files in This Item:
File
Size
324.23 kB





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