## Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe

_IMF Working Papers, June 1, 2011_

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**Canonical URL:** [Sectoral Composition of Foreign Direct Investment and External Vulnerability in Eastern Europe](https://www.imf.org/en/publications/wp/issues/2016/12/31/sectoral-composition-of-foreign-direct-investment-and-external-vulnerability-in-eastern-24886)

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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

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### 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

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/sectoral-composition-of-foreign-direct-investment-and-external-vulnerability-in-eastern-24886_