engleski

The Determinants of FDI: Evaluation of Transition Countries Attractiveness for Foreign Investors

After the downfall of the socialist planned economy and with the beginning of transition towards market economy there has been an increasing interest in foreign direct investments (FDI) in transitional countries. This interest is shown by both parties &#8211 ; multinational economies as investors and transitional countries as host countries. Theoretical and empirical research in this field pays great attention to the definition of the main factors or determinants of the FDI flows into transitional countries. The motives of multinational companies are explained mainly by the Dunning's OLI-theory (Ownership, Locational and Internalization advantages). This work starts from the thesis that these companies have to investigate the attractiveness of individual transitional countries for potential investment by using multicriterial analysis. Therefore, the most important empirically confirmed determinants are identified and by the Analytic Hierarchy Process (AHP), which is one of the multicriterial analysis methods, the attractiveness of a particular transitional country for foreign investors is evaluated. The selected FDI determinants are divided in two main groups: Determinants of the general progress in the transition process and Specific determinants of FDI in transitional countries. Empirical data for the selected determinants are taken from the Transition Report of the European Bank for Reconstruction and Development for 2001.

FDI; transition countries; multicriterial analysis; AHP

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