Decisive FDI barriers that affect multinationals' business in a transition country

Abstract

Foreign Direct Investment (FDI) inflows are of crucial importance to the process of transition from a planned to a market economy for the Central and East European (CEE) countries in the global marketplace. This paper explores specific obstacles that foreign investors and foreign Multinational Enterprises (MNEs), from certain sectors and origin, faced during the establishment of their FDI projects in a transition country, such as Bulgaria. What is more, the degree to which these barriers have been considered by MNEs is evaluated, and special attention is given to the unstable Bulgarian legal framework, its corruption, briberies and bureaucratic procedures. The research data come from the author's questionnaire research, which was conducted in Bulgaria from the period mid-1998 until the end of 1999. Our questionnaire survey concluded that foreign MNEs looked upon bureaucratic or administrative issues and the regulatory environment, together with corruption, political and macroeconomic instability, as the most decisive barriers in their decision to undertake FDI projects in a Balkan country.

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