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Political risk, institutions and foreign direct investment: how do they relate in various European countries?

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dc.contributor.author Benáček, Vladimír
dc.contributor.author Lenihan, Helena
dc.contributor.author Andreosso-O'Callaghan, Bernadette
dc.contributor.author Michalíkovác, Eva
dc.contributor.author Kan, Denis
dc.date.accessioned 2013-06-06T15:43:44Z
dc.date.available 2013-06-06T15:43:44Z
dc.date.issued 2012
dc.identifier.uri http://hdl.handle.net/10344/3133
dc.description peer-reviewed en_US
dc.description.abstract This paper examines theoretically and empirically the extent to which the decision by foreign firms to invest in a group of countries is influenced by economic factors, as opposed to political risk and institutional performance. We consider the importance of these factors as drivers of foreign direct investment (FDI) for 32 European countries (subsequently divided into three pooled clusters) by means ofpanel regression techniques in two specifications over the 1995-2008 period. Our results suggest that risk and institutional factors considered in both static and dynamic perspectives significantly influence the behaviour of investors. Policies and institutions that vary widely between countries modify their decision-making, so that the purely economic factors have different statistical significance and impacts on the intensity of FDI, as was revealed by clustering countries into three groups according to levels of economic maturity. Additionally, not all factors of risk have an identical impact on FDI decisions in particular groups of countries. However, we find that as measures of political risk, monetary discipline, low regulation, effective government and good education prove to be highly significant for most country groupings. All of these measures reduce political risk and positively affect the level of FDI. en_US
dc.language.iso eng en_US
dc.publisher Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague en_US
dc.relation.ispartofseries Institute of Economic Studies, Working Paper Series;24/2012
dc.relation.uri http://ies.fsv.cuni.cz/en/node/331
dc.subject FDI en_US
dc.subject political risk en_US
dc.subject economic institutions en_US
dc.subject panel regression en_US
dc.subject European Union en_US
dc.title Political risk, institutions and foreign direct investment: how do they relate in various European countries? en_US
dc.type info:eu-repo/semantics/workingPaper en_US
dc.type.supercollection all_ul_research en_US
dc.type.supercollection ul_published_reviewed en_US
dc.contributor.sponsor Grant Agency of the Czech Republic en_US
dc.contributor.sponsor University of Limerick en_US
dc.relation.projectid P402/12/0982 en_US
dc.rights.accessrights info:eu-repo/semantics/openAccess en_US
dc.internal.rssid 1443581


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