The aim of this paper is to emphasize the role of institutions to attract FDI in 11 former communist European Countries: eight new members of the European Union (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia) and three candidates to a future enlargement (Bulgaria, Croatia and Romania). In a first step we proceed to an analytical framework to understand the link between transition, institutions and FDI. In a second step we test an empirical model based on pooled data. The results of our empirical test confirm our expectation that FDI is sensitive to specific and local institutional arrangements.

Keywords:
FDI, Institutions, Transition, Host country attractiveness
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© 2006 The Regents of the University of California. Published by Elsevier Science Ltd. All rights reserved.
2006
The Regents of the University of California
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