Riccardo Crescenzi , Marco Di Cataldo (p), Mara Giua

Investment promotion agencies (IPAs) are one of the most widespread public policies adopted by governments to attract investment from multinational firms. In Europe, while the role and importance of IPAs for FDI targeting is widely recognised, with almost all countries having at least one operating IPAs in their own territory, public strategies to attract FDI through IPAs can vary substantially. In some cases, investment promotion activities are managed exclusively by a single national agency, responsible to identify the most appropriate location for private capital investments within the country. In other cases, the responsibility of FDI targeting is shared by the national IPAs with regional and local investment promotion agencies, competing among each other to attract private investors towards the specific region in which they operate. Which of the different models is most effective, and what kind of foreign investment do they most often attract? Is FDI obtained through the effort of IPAs beneficial to the development of the host economy? The evidence emerging from the existing literature is of little help to answer these questions. Despite the considerable public resources allocated to investment promotion agencies around the world, very few applied economic studies have been produced to examine the role and the effectiveness of IPAs. Even less evidence exists on the potential benefits of FDI promoted through IPAs for the receiving economic environments. In addition, this literature has been generally produced through cross-country analyses with a focus on national IPAs, completely overlooking the universe of sub-national IPAs existing within many countries. In this paper, we aim to fill this gap and perform a comparative investigation of FDI-targeting strategies across European regions. By using newly-collected data on national and regional IPAs for a large number of countries (including both EU Member States and neighbouring countries), we develop a differences-in-differences model testing whether the establishment of national and/or regional agencies contributes to the proportion of foreign investments flowing to a region, and examine the extent to which such investment has had a significant impact on the host economy. Our research aims to provide evidence that can inform policy-makers in their search of the most appropriate tools for attracting beneficial investments for their regions and countries.

Luisa Alamá Sabater (p), Teresa Fernández Núñez (p), Miguel Angel Márquez Paniagua

In recent years applied researches have become increasingly interested in the analysis of the determinants of foreign direct investment (FDI). The majority of studies have focused on different factors that may affect these investments. A few studies have examined the extent to which neighboring countries tend to show similar levels of FDI, that is, if neighboring countries are in competition for FDI or whether there are complementarities between FDI flows to neighboring countries. Other studies have suggested that corruption plays an important role in investors’ decision. Each of these previous studies has researched only a part of these complex channels of interactions among FDI movements among countries. Nevertheless, none of the previous studies has examined whether investors use the similarity in the level of corruption among countries as a significant signal to invest. Our hypothesis is that a similar level of corruption is an important determinant of FDI interdependence as it provides a simple and easily observable signal to investors. Besides the role of geographic spillovers or interdependence, the main purpose of this paper is to show empirical evidence about the existence of an additional channel for FDI interdependence between FDI host countries which share similar levels of corruption. The data set used in the analysis is a balanced annual panel with 165 countries for the period 2000 to 2015

Zofia Sincakova (p), Marek Blizco , Oto Hudec

Internationalisation strategies of largest automobile manufacturers have led to significant spatial changes and global re-structuring in production in the last thirty years. Multiple positive location factors of FDIs should coincide when looking for highest profits. The theories emphasising diverse motivations range from neoclassical (Weber, 1909), managerial (Krumme, 1981) to behavioural (Simon, 1957). If dealing with automotive industry, proximity to customers, transportation costs, trade rules and operational costs have been shown as the most motivational factors for decision making of investors throughout different periods (Sturgeon and Florida, 2000). Several theories are highlighting the location factors of skilled labour and its low cost, sales market, nearby suppliers and subcontractors, infrastructure and logistics, economic stability, low taxes, incentives and subsidies, etc.
Automotive industry is one of the symbols of observable technological progress, but also often associated with a decline in production during the economic crises. In the last few decades, multinational companies’ decisions making has been linked to technological/process innovations and a shift from full-scale production to „just in time“ production. The result of the relocation of automotive production from traditional “homelands” can be observed in Central Europe, where four Visegrad countries have experienced an enormous break out of FDI automotive investments and rapidly increasing car production. However, FDIs are criticised for a wide variety of reasons - jobs creation outside the home country, as well as repatriation of profit in the FDI location.
The study of V4 countries with a special focus on the Slovak Republic and recent investments (Jaguar Land Rover) explains the trends, concentration and location factors on the background of de-industrialisation effects being in progress in Europe.
Qualitative research in the form of in-depth interviews with the key persons involved (car producers, ministry, investment agency, local government, chamber of commerce, recruitment agency, etc.) was realised in 2017-2018. The research offers an opportunity to capture the geography and new shifts in automotive FDIs in the Central Europe: incentives-based competition for attracting FDIs, intergrowth and concentration of the interconnected production and suppliers network structures, the “Gastarbeiter” phenomenon along the Eastern side of the former Iron curtain, human resources cannibalism due to lack of workers and increasing influence of recruitment agencies.
At the same time, the other side of the location decisions are examined, i.e. increasing regional specialisation, integration of investments with the regional economic structure, effects on the national economy and interventions into spatial economic distribution.

Vasile Strat (p)

The foreign direct investments (FDI) are an important growth driver of the developing economies across the world and together with the EU funds they were the main fuels of the economic recovery, from the last world crisis, of the economies from the eastern frontier of the European Union. As far as the localization of a future investment, the macroeconomic stability and the labor market of an economy have been identified by a large variety of studies as being ones of the main aspects that are carefully analyzed by foreign investors before deciding for a future host country. The internal market of the host economy which is in general another important driver of FDIs is no longer of first level importance as far as the Union is regarded due to the internal market, and the focus of the investors is shifted towards other characteristics like infrastructure, cost of human resource, quality of human resource and fiscal aspects (which are still heterogeneous at the level of the European Union). On the other hand the literature also reports important benefits for the host economies, coming from this type of investment.
Noteworthy is that in the nowadays socio-economic environment of the European Union, the multinational companies in general and the foreign direct investments in particular are presented by most nationalist political leaders as external entities which are mostly focused on exploiting and depleting the resources of the host economy without bringing any substantial benefits into it.
In the present research the Romanian case is analyzed in the broader context of the eastern frontier of the European Union. Moreover, the evolution of the foreign direct investments, for the case of Romania, for the period 2011 – 2016 is analyzed, at county level, using therefore, panel data, so that patterns that might prove useful for both foreign and local companies and national and local policy makers are identified.