Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe
IMF Working Papers, June 1, 2011
Source details
- Canonical URL
- Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe
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Bibliographic details
- Authors: Yuko Kinoshita
- Published: June 1, 2011
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455263400.001
Executive summary
- In the run up to the global crisis, countries in Central Eastern and Southeastern Europe attracted large capital inflows and some built up large external imbalances.
- The paper investigates whether these imbalances are linked to the sectoral composition of FDI.
- Key conclusion: FDI in the tradable sectors leads to an improvement of the external balance.
- Determinants of greater FDI in tradable sectors include: large market size, good infrastructure, greater trade integration, and an educated labor force.
Major findings
- FDI in the tradable sectors leads to an improvement of the external balance.
- Countries with:
- large market size,
- good infrastructure,
- greater trade integration,
- educated labor force
are more likely to receive more FDI in the tradable sectors.
Subjects and keywords
- Subjects: Balance of payments, Capital controls, Capital inflows, Exports, Foreign direct investment, International trade, Trade balance
- Keywords: Baltics, Capital controls, Capital inflows, Central Eastern Europe, country, export, export-platform FDI, Exports, external vulnerability, FDI in the nontradable sector, FDI inflow, FDI stock, foreign direct investment, share, Southeastern Europe, tradable FDI, Trade balance, Western Europe, WP