Asian FDI in Central and Eastern Europe and its impact on the host countries

摘要

In the late nineties, Japanese and Korean investors have started to embark on an impressive wave of direct investment in Central and Eastern Europe (CEE). The transition from state-planned to market oriented-economies in Central and Eastern Europe has provided valuable new opportunities to these Asian investors by offering them a European market at a non-European price. To these emerging markets, FDI is an instrument to create and rebuild a competitive market economy. Most importantly, FDI upgrades the comparative advantage of the host country. This paper provides an original discussion of Asian foreign direct investment by questioning the role of the host government and the characteristic of the host country on the motives and behaviour of Asian investors and how such investments have an impact on the economies of Central and Eastern Europe. Using case studies, this paper demonstrates that the impact of Asian FDI on these emerging markets depends largely on the comparative advantages of the Asian firms and the actions taken by the host governments. In order to generate positive FDI contributions from these Asian investors, host governments have to understand the determinants of FDI and guide it in such a way to achieve their national interests through macroeconomic reforms, privatisation and most importantly, strengthening institutional framework to improve the investment climate.