BazEkon - The Main Library of the Cracow University of Economics

BazEkon home page

Main menu

Author
Cieślik Andrzej (University of Warsaw, Poland), Gurshev Oleg (University of Warsaw, Poland)
Title
Determinants of inward FDI in Ukraine: Does political stability matter?
Source
International Journal of Management and Economics, 2020, vol. 56, nr 3, s. 243-254, tab., aneks, bibliogr. 42 poz.
Zeszyty Naukowe / Szkoła Główna Handlowa. Kolegium Gospodarki Światowej
Keyword
Inwestycje bezpośrednie, Polityka, Inwestycje zagraniczne, Konflikty zbrojne
Direct investments, Politics, Foreign investment, Armed conflicts
Note
JEL Classification : F23, P33
summ.
Country
Ukraina
Ukraine
Abstract
The main goal of this article is to study the determinants of foreign direct investment (FDI) in Ukraine from 2013 to 2017 that includes the years of armed conflict. We adopt the Knowledge-Capital model as our analytical framework and extend it to include the effects that account for political stability and political regime. The research hypotheses obtained from this framework are verified using the Pseudo-Poisson Maximum Likelihood estimation technique and the bilateral panel data on direct investment stocks from 140 partner countries. Our empirical findings show that access to Ukraine's cheap labor force is the primary reason for inward FDI. Moreover, we find no direct relationship between the political events in Ukraine and the investment stock dynamics as the estimated parameters on the indices of democracy, autocracy, polity, and political stability show no statistical significance.(original abstract)
Accessibility
The Library of Warsaw School of Economics
Full text
Show
Bibliography
Show
  1. Akulava, M., Vakhitova, G. (2010), The impact of FDI on firm's performance across sectors: evidence from Ukraine, BEROC Working Paper No. 010.
  2. Berger, M., Diez, J.R. (2008), Can host innovation systems in late industrializing countries benefit from the presence of transnational corporations? Insights from Thailand's manufacturing industry, European Planning Studies, Vol. 16, No. 8, pp. 1047-1074.
  3. Busse, M., Hefeker, C. (2007), Political risk, institutions and foreign direct investment, European Journal of Political Economy, Vol. 23, No. 2, pp. 397-415, doi: 10.1016/j.ejpoleco.2006.02.003.
  4. Carmignani, F. (2003), Political instability, uncertainty and economics, Journal of Economic Surveys, Vol. 17, No. 1, doi: 10.1111/1467-6419.00187
  5. Cieślik, A. (2013), Horizontally integrated MNE and plant heterogeneity, Bank i Kredyt, Vol. 44, No. 6, pp. 605-622.
  6. Cieślik, A. (2015a), North-North FDI, exporting and the first mover advantage, Bank i Kredyt, Vol. 46, No. 2, pp. 109-128.
  7. Cieślik, A. (2015b), Imperfect competition, productivity differences and proximity-concentration trade-offs, Ekonomia, Vol. 40, pp. 7-30.
  8. Cieślik, A. (2016), Exports versus FDI in Smith-Motta framework, Equilibrium. Quarterly Journal of Economics and Economic Policy, Vol. 11, No. 2, pp. 189-218.
  9. Cieślik, A. (2018), Leader-follower model of reciprocal FDI and international trade, Argumenta Oeconomica, Vol. 41, No. 2, pp. 91-112.
  10. Cieślik, A. (2019), Determinants of foreign direct investment from EU-15 countries in Poland, Central European Economic Journal, Vol. 6, No. 53, pp. 39-52, doi: 10.2478/ceej-2019-0007
  11. Cieślik, A. (2020a), Determinants of foreign direct investment from OECD countries in Poland, Eurasian Economic Review, Vol. 10, No. 1, pp. 9-25, doi: 10.1007/s40822-019-00136-y
  12. Cieślik, A. (2020b), What attracts multinational enterprises from the new EU member states to Poland? Eurasian Business Review, Vol. 10, No. 2, pp. 253-269, doi: 10.1007/s40821-019-00122-z
  13. Cieślik, A. (2020c), MNE activity in Poland: Horizontal, vertical or both? Emerging Markets Finance and Trade, forthcoming, doi: 10.1080/1540496X.2018.1549029
  14. Cieślik, A., Ryan, M. (2012), Productivity differences and foreign market entry in an oligopolistic industry, Open Economies Review, Vol. 23, No. 3, pp. 531-557, doi: 10.1007/s11079-011-9204-6
  15. Davies, R.B., Markusen, J.R. (2020), The structure of multinational firms' international activities, NBER Working Paper, No. 26827.
  16. Helpman, E. (1984), A simple theory of trade with multinational corporations, Journal of Political Economy, Vol. 92, No. 3, pp. 451-471, doi: 10.1086/261236
  17. Helpman, E., Krugman, P. (1985), Market structure and foreign trade: Increasing returns, imperfect competition and the international economy, MIT Press, Cambridge.
  18. Helpman, E., Melitz, M.J., Yeaple, S.R. (2004), Export versus FDI with heterogeneous firms, American Economic Review, Vol. 94, No. 1, pp. 300-316, doi: 10.1257/000282804322970814
  19. Horstmann, I., Markusen, J.R. (1987), Strategic investments and the development of multinationals, International Economic Review, Vol. 28, No. 1, pp. 109-121, doi: 10.2307/2526862
  20. International Monetary Fund (2009), Balance of payments and international investment position manual, International Monetary Fund, Washington, D.C., pp. 100-120.
  21. Ishaq, M. (1997), Foreign direct investment in Ukraine since independence, CERT Discussion Papers No. 9716.
  22. Jakubiak, M., Kudina, M. (2008), The motives and impediments to FDI in the CIS. CASE Network Studies and Analyses 0370.
  23. Kaczmarek, B. (2017), Foreign direct investment of Polish enterprises in Ukraine - its conditions and structure, Management, Vol. 21, No. 2, pp. 109-123, doi: 10.1515/manment-2017-0008
  24. Krugman, P. (1983), The 'new theories' of international trade and multinational enterprise, in: Ch.P. Kindleberger, D.B. Audretsch, (Eds), The multinational corporation in the 1980s, MIT Press, Cambridge MA, pp. 57-73.
  25. Li, C., Murshed, M., Tanna, S. (2017), The impact of civil war on foreign direct investment flows to developing countries, Journal of International Trade & Economic Development, Vol. 26, No. 4, pp. 488-507, doi: 10.1080/09638199.2016.1270347
  26. Li, C., Tanna, S. (2019), The impact of foreign direct investment on productivity: new evidence for developing countries, Economic Modelling, Vol. 80, pp. 453-466, doi: 10.1016/j.econmod.2018.11.028
  27. Li, Q., Vashchilko, T. (2010), Dyadic military conflict, security alliances, and bilateral FDI flows, Journal of International Business Studies, Vol. 41, No. 5, pp. 765-782, doi: 10.1057/jibs.2009.91
  28. Lutz, S.H., Talavera, O., Sang-Min, P. (2003), The effects of regional and industry-wide FDI spillovers on export of Ukrainian firms, ZEI Working Papers B 18-2003.
  29. Markusen, J., Venables, A. (1998), Multinational firms and the new trade theory, Journal of International Economics, Vol. 46, No. 2, pp. 183-203, doi: 10.1016/S0022-1996(97)00052-4
  30. Markusen, J., Venables, A. (2000), The theory of endowment, intra-industry and multi-national trade, Journal of International Economics, Vol. 52, No. 2, pp. 209-234, doi: 10.1016/S0022-1996(97)00052-4
  31. Markusen, J.R. (1984), Multinationals, multi-plant economies and the gains from trade, Journal of International Economics, Vol. 16, No. 3-4, pp. 205-226, doi: 10.1016/S0022-1996(84)80001-X
  32. Markusen, J.R. (2002), Multinational firms and the theory of international trade, MIT Press, Cambridge, MA.
  33. Markusen, J.R. (2013), Multinational firms, in: D. Bernhofen, R. Falvey, D. Greenaway, U. Kreickemeier, (Eds), Palgrave handbook of international trade, Palgrave Macmillan, Basingstoke, pp. 236-262.
  34. Olekseyuk, Z. (2015), The EU-Ukraine deep and comprehensive free trade agreement and the importance of FDI. GTAP Resource #4764.
  35. Resnick, A. (2001), Investors, turbulence, and transition: Democratic transition and Foreign Direct Investment in nineteen developing countries, International Interactions, Vol. 27, No. 4, pp. 381-398.
  36. Riker, D., Wickramarachi, H. (2020), Review of literature on foreign direct investment, U.S. International Trade Commission Economics, Working Paper Series, Working Paper No. 2020-04-B.
  37. Santos Silva, J.M.C., Tenreyro, S. (2006), The log of gravity, The Review of Economist and Statistics, Vol. 88, No. 4, pp. 641-658, doi: 10.1162/rest.88.4.641
  38. State Statistics Service of Ukraine. (2019), Direct investment (equity capital) from countries of the world to Ukraine economy (annual trends) [online], retrieved from https://ukrstat.org/en/operativ/menu/menu_e/zed.htm
  39. The Worldwide Governance Indicators Project. (2019), The Worldwide Governance Indicators [online], retrieved from https://info.worldbank.org/governance/wgi/
  40. Turner, N., Aginam, O., Igbokwe, V.C. (2011), Foreign direct investment in post-conflict countries: opportunities and challenges, Adonis & Abbey Press, London, UK.
  41. Zhang, K.H., Markusen, J.R. (1999), Vertical multinationals and host-country characteristics, Journal of Development Economics, 59(2), 233-252.
  42. Zvirgzde, D., Schiller, D., Revilla, D.J. (2013), Location choices of multinational companies in Ukraine, ERSA Conference Papers ersa13p219.
Cited by
Show
ISSN
2299-9701
Language
eng
URI / DOI
https://doi.org/10.2478/ijme-2020-0021
Share on Facebook Share on Twitter Share on Google+ Share on Pinterest Share on LinkedIn Wyślij znajomemu