Skip to main navigation menu Skip to main content Skip to site footer

Policies towards the OFDI and IFDI in the European Union after the 2008+ crisis

DOI:

https://doi.org/10.15678/EBER.2016.040208

Abstract

Objective: The objective of this paper is to evaluate the (post)crisis FDI policies in Europe, taken the significant drop in international foreign direct investment (FDI) flows as observed in the aftermath of 2008+ crisis as well as the accompanying ideological shifts as to the role of the State in the economy.


Research Design & Methods: By synthesising the available sources – critical literature review, evaluation of rankings and scoreboards and experts’ survey - this paper seeks to classify the EU member states according to their policies pursued towards outward and inward foreign direct investment (IFDI, OFDI) in the context of 2008+ crisis.


Findings: A matrix with for possible combinations of FDI policy has been proposed. It distinguishes: an open model with “a double positive strategy”, closed with “a double negative strategy”, competitive with “a positive outward and negative inward strategy”, and a capital model with “a positive inward, negative outward strategy”. Obtained results point to the dominance of two opposite models where countries seem to apply combinations of rather friendly IFDI (or OFDI) and unfriendly OFDI (or IFDI) policies.


Implications & Recommendations: Current scarcity of a proper metric of FDI policy has made it necessary to draw on some imperfect substitutes, hence findings must be treated with caution. Properly designed, reliable international database enabling crosscountry comparisons in terms of FDI policies would certainly improve the quality of future research.


Contribution & Value Added: Presented research findings can be seen as a voice in the discussion on FDI policy in Europe, in particular on the issue of operationalisation of such policy.

Keywords

FDI, OFDI, IFDI, policy towards FDI, crisis, EU, classification,

PDF

Author Biography

Marta Götz

Institute of International Relations, associate professor


References

  1. Aalbers, M. (2013). Neoliberalism is dead…long live neoliberalism! International Journal of Urban and Regional Research, 37(3), 1083-1090.
  2. Bellak, C., Leibrecht, M., & Stehrer, R. (2010). The role of public policy in closing foreign direct investment gaps: an empirical analysis. Empirica, 37(1), 19-46.
  3. Brewer, T. (1993). Government Policies, Market Imperfections and Foreign Direct Investment. Journal of International Business Studies, 24(1), 101-120.
  4. Buckley, P.J., Clegg, J.L., Cross, A.R., & Voss, H. (2010). What Can Emerging Markets Learn from the Outward Direct Investment Policies of Advanced Countries? In Sauvant, K.P., & McAllister, G., (eds.), Foreign Direct Investments from Emerging Markets. The Challenges Ahead (pp. 243-276). New York: Palgrave Macmillan.
  5. Casson, M. (2007). Multinational enterprises: their private and social benefits and costs. World Economy, 30(2), 308-328, doi: 10.1111/j.1467-9701.2007.00884.x
  6. DICE Database (2014). Foreign Direct Investment (FDI) Regulatory Restrictiveness Index, 1997 – 2012. Ifo Institute, Munich, Retrieced from http://www.cesifo-group.de/DICE/fb/YRDXic5A Cuervo-Cazurra, A., & Genc, M. (2011).
  7. Transforming disadvantages into advantages: develop-ing-country MNEs in the least developed countries. Journal of International Business Studies, 39(6), 957-979.
  8. Dowling, J., & Pfeffer, J. (1975). Organizational legitimacy: social values and organization behav-ior. Pacific Sociological Review, 18 (1), 122-136.
  9. Drahokoupil, J. (2008). The Investment-Promotion Machines: The Politics of Foreign Direct Invest-ment Promotion in Central and Eastern Europe, Europe-Asia Studies, 60 (2), 197 – 225.
  10. Evenett, S.J. (2012). The Landscape of Crisis-Era Protectionism, 19-40, in: Débâcle: The 11th GTA Report on protectionism. Retrieved from http://www.globaltradealert.org/sites/default/files/GTA1 1_chapter2.pdf accessed March 2015.
  11. Faeth, I. (2009). Determinants of foreign direct investment - a tale of nine theoretical models. Journal of Economic Surveys, 23(1), 165-196. doi: 10.1111/j.1467-6419.2008.00560.x
  12. Gestrin, M. (2014). International investment in Europe: A canary in the coal mine? OECD Invest-ment Insights. Retrieved from http://oecdinsights.org/2014/11/17/international-investment-in-europe-a-canary-in-the-coal-mine/
  13. Globerman, S., & Chen, V.Z. (2010). Best Policy Practices for Promoting Inward and Outward For-eign Direct Investment. Ottawa: The Conference Board of Canada. Report October 2010. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1722003 accessed September 2015.
  14. Golub, S.S. (2009). Openness to Foreign Direct Investment in Services: An International Compara-tive Analysis. World Economy, 32, 1245–1268. doi: 10.1111/j.1467-9701.2009.01201.x
  15. Gorynia, M., Nowak, J., Trąpczyński, P., & Wolniak, R. (2013). Overview and Evaluation of Policy Measures Supporting Outward FDI: The Case of Poland, , In Kaynak, E., & Harcar, T.D. (eds.), Twenty Second World Business Congress Flexibility, Innovation and Adding Value as Drivers of Global Competitiveness: Private and Public Sector Challenges (pp. 108-115). , Taipei: National Taipei University.
  16. Götz, M. (2015). Remarks on (post)crisis developments of inward and outward FDI in the EU, , in: Opolski, K., & Górski, J., (eds.), Strategie gospodarcze i społeczne Unii Europejskiej, (pp. 307-317). Warsaw: Uniwersytet Warszawski.
  17. Guimón, J., & Filippov, S. (2012). Competing for High-Quality FDI: Management challenges for investment promotion agencies. Institutions and Economies, 4(2), 25-44.
  18. Harding, T., & Javorcik, B. (2011). Roll Out the Red Carpet and They Will Come: Investment Promo-tion and FDI Inflows. The Economic Journal, 121(557), 1445-1476, DOI: 10.1111/j.1468-0297.2011.02454
  19. Hymer, S. (1976). The international operations of national firms: a study of foreign direct invest-ment. Cambridge: The MIT Press.
  20. Kline, J.M. (2002). Enhancing the development dimension of home country measures, The Devel-opment Dimension of FDI: Policy and Rule-making perspectives. Proceedings of the Expert Meeting held in Geneva from 6 to 8 November 2002, UNCTAD/ITE/IIA/2003/4, 101-114.
  21. Mistura, D.G. (2011) The Promotion of Outward Foreign Direct Investment: A Comparative Policy Analysis of BRIC Countries, Sao Paulo, 2011, mimeo.
  22. OECD (2012). OECD Economic Policy Reforms 2012. Retrieved from http://www.oecd-ilibrary.org/economics/economic-policy-reforms-2012_growth-2012-en
  23. Ratten, V., Dana, L.P., Han, M., & Welpe, I. (2007).
  24. Internationalisation of SMEs: European com-parative studies. International Journal of Entrepreneurship and Small Business 4(3), 361-379.
  25. Sauvant, K.P. (2015). AIM Investment Report 2015: Trends and policy challenges. Presentation at the opening of the Annual Investment Meeting, Dubai. Retrieved from http://ccsi.columbia.edu/2015/03/31/aim-investment-report-2015-trends-and-policy-challenges/
  26. Scott, W.R. (1995). Institutions and Organizations, Thousand Oaks: Sage.
  27. Sellar, C., & Pástor, R. (2015). Mutating Neoliberalism: The Promotion of Italian Investors in Slo-vakia before and after the Global Financial Crisis. International Journal of Urban and Regional Research, 39, 342-360. doi: 10.1111/1468-2427.12210
  28. Szalavetz, A. (2015). Post-crisis approaches to state intervention: New developmentalism or indus-trial policy as usual? Competition & Change, 19(1), 70-83, DOI:10.1177/1024529414563009
  29. Tax Foundation (2014). Corporate income tax rates around the world . Retrieved from http://taxfoundation.org/article/corporate-income-tax-rates-around-world-2014
  30. The Centre for Economic Policy Research (2016). Global Trade Alert. Retrieved from http://www.globaltradealert.org/
  31. The Heritage Foundation (2016). Index of Economic Freedom. Retrieved from http://www.heritage.org/index/Jankowska, B., Gorynia, M., & Dzikowska, M.M. (2015). Eco-nomic crisis as an internationalization trigger in a transition economy? Addressing the ambi-guity issue, Paper presented at the 41st Annual International EIBA Conference, , Rio de Janei-ro.
  32. The Oxford dictionary (2015). Policy, Retrieved from http://www.oxforddictionaries.com/definition/english/policy
  33. The World Economic Forum (2016). Global Competitiveness Report. Retrieved from - http://www .weforum.org/reports/global-competitiveness-report-2014-2015
  34. Torres, M.M., & Clegg, L. J. (2014). Policy effectiveness and "misalignment" with firms - strategies. A study of pro-internationalization incentives. The Multinational Business Review, 22(4), 1-22.
  35. UNCTAD (2016). Investment Policy Hub. Retrieved from http://investmentpolicyhub.unctad.org
  36. World Bank (2016). Doing Business Ranking. Retrieved from http://www.doingbusiness.org/

Downloads

Download data is not yet available.