The Impact of the Recent Global Crisis on Foreign Direct Investment. Evidence from Central and Eastern European Countries

Abstract

Few studies have investigated the relationship between the recent global financial and economic crisis and FDI flows. This paper aims to analyze such a relationship for Central and Eastern European countries (EU members). The crisis had a major impact on capital flows to the region, although the magnitude of the impact differed notably, depending on the type of capital inflows and the receiving country. In order to highlight this, we use a regression model and panel data methodology, trying to find if there is some difference between the analyzed countries. The results will be very useful if there is a pattern for different countries regarding the main effect of the financial crisis and the interaction with economic growth over the FDI. Taking into consideration the fact that we found that economic growth has a significant influence over the level of FDI and, moreover, a positive influence, the present study is very important in supporting the regulatory environment of those specific countries, in order to attract more FDI, as a solution for recovery of the economies affected by crisis.

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