Impact of COVID-19 and the Ukrainian War on FDI in a Panel of Eastern European Economies

Abstract

The COVID-19 pandemic, coupled with the Russia-Ukraine war, has had disastrous consequences for the global economy. As a result of the crisis, the normal way of conducting business has changed drastically, and, with the ongoing Russian invasion in Ukraine, many governments and companies have taken immediate investment-related measures. Undoubtedly, the majority of Eastern European countries have been severely hit. It is therefore crucial to find out what impact these challenges have on foreign direct investment in these countries. To do so, the paper employs the panel data technique to estimate the impact of COVID-19 and the Ukrainian war on FDI in Eastern European economies from 1995 to 2022. The regression results show that both the pandemic and the war have discouraged foreign investment in the panel of countries considered in the sample. The results further indicate that per capita growth and trade openness are important determinants of FDI. COVID-19, Ukrainian war, Eastern Europe, Fixed effect model.

Keywords

• covid-19
• ukrainian war
• eastern europe
• fixed effect model