Attracting and hosting foreign direct investment in digital transformation time. The case of post-transition economies

Abstract

This research touches upon the challenges related to attracting and retaining foreign direct investment (FDI) in times of digital transformation. Foreign direct investment (FDI) has been crucial for post-transition dependent market economies (DMEs), and was critical during the transformation processes. This study takes the perspective of the host economies, and in particular, the (post) transition V4 countries. The focus of this research is on the antecedents of investment-attractive locations in the Industry 4.0 era and the factors that have determined this attractiveness during the digital transformation. This paper is based on a critical literature review and in-depth expert interviews. The authors put forward three research proposals that stipulate the necessity of assuring absorption capabilities, embeddedness and upgrading, the importance of state intervention and incentives, the need for new regulations, and a digital ecosystem. The study indicates that in the realm of Industry 4.0, firms investing abroad need to look for locations rich in knowledge. Knowledge pools embedded in a particular location play the most important role in luring foreign investors.

Keywords

• foreign direct investment (fdi)
• industry 4.0
• digital transformation
• post-transition economy