New Eu Member States Of Fdi Determinants And Economic Impact Analysis

The thesis mainly analyses the impact of FDI on 12 new EU member states. The 12 new EU member states mostly consist of developing countries, among which most are former socialist countries. Since 1989 when the Soviet Union collapsed, new EU member states, particularly these former socialist countries, conducted a series reforms in terms of politics, economy, and legal system. Along with these reforms is the establishment of a completely new legal and political system, market economy, and privatization regime. Among these dramatic changes, FDI never played a negligible role. The inflow of FDI is on one hand attracted by the distinctive advantage of resource, cost and market potential in new EU member states. On the other hand, FDI played an important role in the establishment of market economy and economic development in new EU member states during the transition.The thesis first discusses the history and development of FDI in new EU member states, based on various FDI theories. Particularly, the thesis analyses the characteristics of FDI in terms of the trend of FDI inflow, geographical location of FDI, and where FDI comes from.Second, also based on FDI theories, the thesis analyzed the factors that affect FDI in new EU member states by means of an empirical study. The thesis analyzed the effect of current market size, openness, and population on the location of FDI. It also analyzed whether EU candidacy and EU membership have a positive effect on FDI in these countries.Finally, the thesis discussed the impact of FDI on economic growth, industry structure, competitiveness of enterprises, labor market, and economic regime and policy in new EU member states. The conclusion is that the most significant impact of FDI does not fall on economic growth but on industry structure and the transfer of technology and management expertise. Besides, the introduction of large flows of FDI helps these countries, especially transitional economies, with building up a market economy, modern legal system and privatization. In the end, the thesis also suggests several policies regarding how China can ensure a constant FDI inflow boosting economic development based on the above analysis.