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This paper examines the relationship between the real exchange rate and the foreign trade imbalance in both the Western Balkan (WB) and Central and Eastern European (CEE) countries. During the most recent global economic crisis, examining the impact of the exchange rate on the balance of trade took on a particular importance. Countries used a variety of monetary policy regimes and, depending on their choice, they had different economic instruments available to deal with the crisis. The aim of the research was whether exchange rate devaluation and/or depreciation are capable of effectively and fully eliminating the negative effects of the global economic crisis, as well as the consequent poor export performance and contracted economic activity. Our findings show that during an economic crisis those countries that use their own currency cannot substantially adjust their trade deficit by depreciating their currency. Moreover, it is suggested that during the global economic crisis, the balance of payments deficit is not impacted significantly by the exchange rate, any more. In such cases, other factors play a more significant role, like as government spending, followed by foreign demand and direct investments. [ABSTRACT FROM AUTHOR]

A massive surge in foreign investment, beginning with the transition to an enlarged European Union, has contributed strongly to the automobile sector's reorganization in Central and East European countries (CEECs). In an attempt to complement the essentially qualitative literature on the subject, this paper proposes an original empirical approach to evaluate the maturity of the CEEC automobile sector and its integration into the European automobile production network. Relying on six-digit-level disaggregated data on the CEEC automobile sector's trade within Europe for the period 1993-2003, the paper analyzes the composition of trade as well as the evolution of the CEECs' intraindustry trade (IIT). First, the results demonstrate that core CEECs no longer show any sign of a technological deficit or maturity gap vis-à-vis their partners from the ex-EU-15, with whom they reached high levels of IIT, whereas peripheral CEECs continue to accommodate infant industries that generate little IIT. Second, the econometric analysis confirms that the high levels of IIT between core CEECs and their neighboring countries in the ex-EU-15 are a consequence of the production process's decomposition within the central basin, initiated by important foreign direct investment relocation flows. These results, based on the largest available data set over the transition period, confirm that the heart of the sector, previously centered on Germany, has extended to the CEECs of Central Europe, whereas Baltic and Southern CEECs remain hardly integrated. In the long run, the successful integration of core CEECs should reinforce the German pole in the European Union and have a major effect on the European automobile sector's geography. [ABSTRACT FROM AUTHOR]

This paper estimates a labor demand equation based on the panel data of the manufacturing industries in the Central and East European countries of Czech Republic, Hungary, Poland, Slovakia, Slovenia, Lithuania, Bulgaria, and Romania. It tests the effect of domestic factors (wages and output) and international factors (exports, imports, and foreign direct investment, or FDI) on employment during the era of post-transition recovery. The findings indicate that employment does not respond to wages in more than half the cases. The output elasticity of labor demand is mostly positive, but low; in a number of cases, employment is completely delinked from output. An impressive speed of integration to the European economic sphere through FDI and international trade has not prevented job losses in the manufacturing industry. There are very few cases of positive effects, but insignificant effects of trade and FDI dominate the findings, with some evidence of negative effects as well. [ABSTRACT FROM AUTHOR]

The aim of this work was to present the similarities between the components of competitiveness and investment attractiveness as two complementary categories, and to show the role of new locational advantages in determining the level of investment attractiveness of a country. Another objective of this paper was to provide a comparative analysis of Central and Eastern European countries in terms of their investment attractiveness. Thus this paper was organized as follows: the first part of the paper focused on a country's competitiveness, and the traditional and new location advantages that determine its investment attractiveness in view of direct investment inflows in the light of M. Porter's model of a diamond, an eclectic paradigm of J. H. Dunning and new growth theories. The second part presented the results of investment attractiveness analysis including selected countries of CEE in the years 1995-2013. Comparing the investment attractiveness of Central and Eastern European countries shows that a rather narrow group of countries attracts a greater amount of FDI, and many more countries have experienced a decline in FDI. Therefore, the research results allow for the conclusion that Central and Eastern Europe reduced its investment attractiveness over the past years. This means that the majority of Central and Eastern European countries are becoming less successful in attracting FDI, and therefore in shaping the environment in which foreign companies wish to conduct their business. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to analyze the degree of the penetration of foreign banks in the banking system of some countries in Central and Eastern Europe, with special reference to Romania. This is done using two significant indicators, such as: the share of foreign banks in the total of the banks in a country and the share of foreign bank assets in the total bank assets in a country. It will also analyze the global character of the activity of foreign banks in Romania and their international character, with the focus on how these two aspects have evolved over time. This will be achieved by analyzing the indicator: FOREIGN claims of BIS reporting banks towards Romania. [ABSTRACT FROM AUTHOR]

This paper analyzes the development of the external balance in five Central and East European countries: Czech Republic, Hungary, Poland, Slovakia, and Slovenia. The paper applies, expands, and empirically verifies the ideas of life-cycle theory in the area of the effects of foreign direct investment on the balance of payments in transition countries. The article defines and explores the basic general stages in the external balance of a transition country. The definition of the stages draws from a model of consumer behavior within the life-cycle theory. The external balance stages are defined as follows: young transition economy, mature transition economy, posttransition economy, and expanding economy. The paper develops a model that provides criteria that not only classify the current stage of each transition country, but also evaluate the success in the catching-up process of the country examined. [ABSTRACT FROM AUTHOR]

The aim of this paper is to evaluate the significance of the valuation effect in determining the dynamics of the net international investment position of CEE economies. For this purpose an analysis of BoP and IIP time series for the four largest CEE economies (Poland, the Czech Republic, Hungary and Romania) for the years 2005-2013 was carried out. The exercise revealed that the valuation effect (VE) is, in the short run, the key determinant of net IIP changes (for most observed years). Nevertheless, in the long-run its influence decreases as valuation gains and losses tend to cancel each other out. As the VE is relatively volatile, it is important to analyse its dynamics over the mid and long-term when evaluating the IIP. The significance of the VE for determining net IIP dynamics turned out to be non-investment-type specific because valuations of both the short-term and longterm investments contributed in a large part to the change in the net IIP. Similarities in the dynamics of the VE in CEE countries prove that the VE depends to a large extent on the general price fluctuations in financial markets that nowadays exhibit strong correlations across countries. [ABSTRACT FROM AUTHOR]

The aimof this paper is to assess the role of human capital in attracting fdi in the light of selected empirical studies conducted in Poland and globally. The literature on factors determining fdi location, including those relating to the importance of human capital, is dominated with studies at national or supranational level. Attracting foreign investment has become a key component of national strategies for the cee countries. The paper makes an attempt to assess the relevance of human capital for fdi inflow at regional and local levels in Poland. At the same time, results of analyses were contrasted with quantitative surveys conducted in Central and Eastern Europe. Investing in education and human capital is important for creating good climate for investment. Evidence shows that achieving a certainminimumlevel of education is the precondition for a country to attract andmaintain foreign direct investment andmaximise indirect effects connected with human capital and resulting from the presence of businesses with foreign capital and maximise indirect effects connected with human capital and resulting from the presence of businesses with foreign capital. We should also stress that such aminimum is different for different sectors of the economy. Results of the study conducted in the Lodz Region demonstrated that human capital is an important factor, which attracts fdi to the region. [ABSTRACT FROM AUTHOR]

This paper analyzes the location decision for foreign direct investments (FDI) in Central and Eastern European (CEE) countries based on the attractiveness of policies most influenced by public officials. Our assessment of the FDI inflows in a country is based on four pillars: infrastructure, quality of institutions, labor market and taxes. The attraction degree of the CEE countries in 2007 and 2010 is calculated using the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) method, a tool usually used for decision-making issues. The empirical result indicates that Estonia is the most attractive country for investments (as regards the public policy approach). Globally, the paper establishes the state's role in attracting FDI and identifies whether there is room for further improvement on the public policy side. [ABSTRACT FROM AUTHOR]

As an engine for economic development of CEE countries, FDI inflows have contributed to creating new jobs and access to modern technologies; have had positive effects on balance of payments and state budget revenues. The purpose of this article is to highlight the implications of international financial and economic crisis of 2007 on FDI in CEE countries. Also, we realized a comparative approach of the factors that influence investors' decisions in Czech Republic, Hungary, Poland, Romania, Slovakia and a SWOT analysis of FDI in Romania at the end of 2009. The second part of the article represents an econometric analysis using SPSS of FDI impact on GDP and unemployment rate on the example of Romanian economy during 1991-2009. The fundamental hypothesis of econometric analysis is the following: it is a direct link between FDI and GDP, respectively, an inverse link between FDI and unemployment rate. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of new capital accumulation on capital-labor and capital-output ratios in 26 transition economies (TE) of Central and Eastern Europe and former USSR. Using a perpetual inventory method, we estimate the amount of capital accumulated in these countries since the start of market reforms and compare it to results for developed countries and largest emerging market economies. We found that on per worker basis, capital accumulation in TE is lagging far behind that of their mature market neighbors in European Union. Disparities in capital-output ratios were not as pronounced, as higher capital-labor ratios were reached in economies with higher levels of GDP per capita. Regression analysis indicates that capital per worker was accumulated faster in TE having higher saving rates, relatively higher priced labor, closer proximity to Western Europe, and higher manufacturing share in the economy. The K/Y levels were influenced by the same determinants except for relative input costs. [ABSTRACT FROM AUTHOR]

This article presents information about the book "Regionalism and the Global Economy: The Case of Central and Eastern Europe," by Jan Joost Teunissen. The papers in this book and comments, resulting from a conference held at the Institute of Economics of the Czech National Bank in January 1997, analyze the integration of Central and Eastern Europe at subregional, regional, and global levels. Piritta Sorsa discusses the role of transition policies and regional trade agree- merits in fostering trade and foreign direct investment in the Baltics. András Inotai as- sesses prospects for joining the European Union.

Abstract: Few studies have investigated the relationship between the recent global financial and economic crisis and FDI flows. This paper aims to analyze such a relationship for Central and Eastern European countries (EU members). The crisis had a major impact on capital flows to the region, although the magnitude of the impact differed notably, depending on the type of capital inflows and the receiving country. In order to highlight this, we use a regression model and panel data methodology, trying to find if there is some difference between the analyzed countries. The results will be very useful if there is a pattern for different countries regarding the main effect of the financial crisis and the interaction with economic growth over the FDI. Taking into consideration the fact that we found that economic growth has a significant influence over the level of FDI and, moreover, a positive influence, the present study is very important in supporting the regulatory environment of those specific countries, in order to attract more FDI, as a solution for recovery of the economies affected by crisis. [Copyright &y& Elsevier]

Since banking sectors from Central and East-European countries are currently characterized by high levels of presence of foreign banks, in this article we intended to conduct a costs and benefits analysis on their entry in the banking markets of these countries. The study will begin with a comparative analysis on bank privatization policies used in 5 Central and Southeastern Europe countries (Poland, Slovakia, Hungary, Romania and Bulgaria), because they had a great influence in increasing domination of banks with foreign capital. We will also compare the characteristics and structure of the banking sector in each of the five countries and we'll show that in recent years, in every country, there is a growing governance of foreign-owned banks. [ABSTRACT FROM AUTHOR]

Abstract: The main objective of this paper is to examine the efficiency of foreign investment borrowing by Poland in the 1970s. That decade was of particular significance in the post-war history of Central and Eastern Europe. For the first time after the World War II, Poland – a major country in the socialist block – opened up to western economies by increasing foreign trade and by taking loans to finance the imports of modern technology and investments. Since there has been a major disagreement about the economic impact of the loans, we make an attempt to resolve this controversy. The considerations are conducted in a macroeconomic model. Based on the econometric analysis, we conclude that the efficiency of foreign investment borrowing was relatively high. It means that the policy of using external sources to finance economic growth was fully justified. [Copyright &y& Elsevier]

China has become leading recipients of foreign direct investment (FDI). Meanwhile, an increasing share of global FDI is going to many Central and Eastern European countries (CEECs). What is the relationship between inward FDI of China and the CEECs? We conceptualize the relationship according to three alternative paradigms: (1) China and the CEECs each exist in its own regional production network, with no linkage between FDI flows into China and into CEECs; (2) China and the CEECs together comprise a global production network, so that China's FDI is positively related to CEECs' FDI; and (3) FDI into China is a substitute for FDI into the CEECs, with the correlation being negative. In this paper, we study empirical estimates of this issue for 15 CEECs for 1990-2004 using four different econometric approaches: FGLS with Random effects, FGLS with fixed effects, EC2SLS and GMM. The result supports the conclusion that China's inward FDI does not crowd out CEECs' inward FDI. In fact, it shows that in some regressions FDI flows in these two regions are moderately complementary. Our analysis also confirms the importance for FDI flows of determinants such as market size, degree of trade liberalization, labor quality and a healthy global FDI supply. [ABSTRACT FROM AUTHOR]

On the basis of existing data on foreign direct investment (FDI) in Central European economies in transition, the paper evaluates some aspects of FDI development implications for these economies. Too high expectations about FDI development implications could lead to a kind of restrictive reaction which would limit future inflow of greenfield FDI. [ABSTRACT FROM AUTHOR]

This study of entry into Central and Eastern Europe via acquisition of privatized firms combines a traditional merger approach with consideration of host governments as critical stakeholders and the country-specific risks of foreign direct investment in formerly Communist countries. We analyzed survey data on 170 privatization acquisitions by Western firms. The results provide insights into critical managerial issues for acquisitions in transitional economies, especially the importance attached to fit between the merging firms, and indicate a need to reexamine some previous privatization research. [ABSTRACT FROM AUTHOR]

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This article explores the attitudes of trade union organizations to restructuring and privatization of their enterprises to strategic foreign investors in Central and Eastern Europe's biggest steel producers: Poland, Czech Republic, Romania, and Slovakia. Contrary to advocates of insulating technocratic decision-makers from social partners, this article argues that higher quality of democracy and concomitant social dialogue carried out at the level of the sector with union organizations that are autonomous of the government in power (as was the case in the Czech Republic and Poland), are associated with greater restructuring and with support for privatization to strategic foreign investors. In these circumstances, the unions actually pressure reluctant governments to accelerate the privatization process. By contrast, politically motivated capture of individual enterprise-level unions and splitting them from sectoral-level organizations, as occurred in countries with lower quality of democracy (Romania and Slovakia), weakens the autonomous sectoral-level organizations, which are generally supportive of restructuring. Conversely, captured unions remain far more resistant to reform than their counterparts belonging to autonomous sectoral organizations. Thus, higher quality of democracy and concomitant vibrant social dialogue safeguard industrial restructuring. [ABSTRACT FROM AUTHOR]

Emotions are largely absent in economic models. Possibly for this reason, many theories fail to explain the actual decisions made by managers. Therefore, we integrate emotions with regular microeconomic theory. We focus on FDI decisions, and include both economic and emotional variables in our analysis of the firm's decision-making process. In our theoretical analysis, emotions are included in a utility maximization model that considers not only the utility of the firm but also the utility of the individual decision-maker. In our empirical analysis, the presence of emotions in FDI decision-making is tested using a sample of Dutch enterprises that considered an investment in Central or Eastern Europe between 1990 and 2000. Key Results The empirical results show that emotions are important in economic decision- making. The presence of positive emotions increases the chance of Dutch firms to engage in an FDI in Central and Eastern Europe [ABSTRACT FROM AUTHOR]

Multinational corporations (MNCs) often enter emerging market countries through acquisitions of or alliances with privatized companies or state-owned enterprises (SOEs). Acquiring SOEs and forging strategic alliances--ranging in intensity from nonequity contractual relationships to joint ownership--give multinationals potential market advantages in regions like Central and Eastern Europe that are undergoing economic transformation. In many Central and Eastern European countries, however, MNC partnerships or acquisitions can be seen as threats by state enterprises, privatized companies, government agencies, or political interest groups that oppose foreign domination of domestic industries. In order to succeed, MNCs must develop alliances or acquisitions as win-win arrangements that benefit not only their own shareholders, but also their host-country counterparts and governments. MNCs can carefully plan win-win arrangements through a process that clearly defines and prioritizes business objectives, identifies the most effective entry channels and options, assesses the potential impacts on major host-country stakeholders, determines local partner fit, and creates mutually beneficial results. Alliances and acquisitions are more likely to succeed when all stakeholders see MNCs as partners in privatization and economic transformation. [ABSTRACT FROM AUTHOR]

Focuses on foreign direct investment (FDI) in Central Europe and explains the reasons for the sudden interest of foreign investors in the region through the performance of an econometric study. Pattern of FDI in Central Europe; Privatization programs; Tax incentives and legal framework; Macroeconomic stability; Labor costs; Structural characteristics; Strategic motives.