Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201283 
Year of Publication: 
2013
Series/Report no.: 
ETLA Report No. 1
Publisher: 
The Research Institute of the Finnish Economy (ETLA), Helsinki
Abstract: 
We have defined the Baltic Sea Region as consisting of the following countries: Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Poland, Sweden, and Russia. We investigate foreign direct investment (FDI) flows from 1995 to 2010 to these countries econometrically. We use two basic models: the first one treats aggregate FDI inflows by countries, and the second focuses on bilateral FDI flows between country pairs. Because of limitations in data availability, the second model is built for a smaller group of countries. In this model we take into account the origin country of the FDI. Our results show that macroeconomic factors such as corporate taxes are important determinants for FDI flows. We notice that these factors and their effects vary between the Baltic Sea Region countries. Foreign trade with the investing country is also a statistically significant determinant for FDI, i.e. the countries that have trade with each other also invest in each other. On the other hand distance between countries doesn’t explain FDI flows. Institutional factors such as EU membership or a common currency are not statistically significant in our estimations but this could be because of data limitations and because of the fact that these changes in countries’ international status are incorporated in the other variables and are also foreseen by the investors.
Subjects: 
Foreign direct investment (FDI)
Baltic Sea Region
Denmark
Estonia
Finland
Germany
Latvia
Lithuania
Poland
Sweden
Russia
JEL: 
F21
F23
F13
F15
Document Type: 
Research Report

Files in This Item:
File
Size





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