Wiener Institut für Internationale Wirtschaftsvergleiche The Vienna Institute for International Economic Studies FDI in SEE countries by Gábor Hunya

2 Basic definitions >Concept: Macroeconomic category with micro-economic content >International capital movement permanent equity relations and participation in the management >Practice: IMF Balance of Payments Manual, Revision 5 >At least 10 per cent of the target firm's nominal capital in the form of: >· equity investment in cash, >· equity investment in kind, >· reinvested profits, >· loans from the parent company to the subsidiary >Flows in the capital account >Stocks in the international investment position

3 Host country determinants and types of FDI >Types of FDI allowed by economic determinants: resource and strategic asset seeking FDI market seeking FDI: purchasing power efficiency seeking FDI: production cost >Policy framework: political and economic stability legal and regulatory environment privatization >Business facilitation: promotion, incentives, institutions

4 FDI inward stock, EUR million

5 FDI Inward Stock per GDP, %

6 FDI inflow, EUR million

7 UNCTAD ranking of countries

8 Indicators of Competitiveness, 2002

9 Share of foreign affiliates in manufacturing, %

10 Share of FIEs in employment

11 FDI prospects in SEECs >Support to transformation and growth >Intensifies with EU accession >Means of privatization and restructuring >Supports competitiveness and export-lead growth >Transfer of technology and skills; but little in Western Balkans >Western Balkans has high costs and high prices