Does a country’s business regulatory environment affect its attractiveness to FDI? Empirical evidence from Central and Southeast European countries

Abstract

The paper squarely concentrates on an examination of the relationship between a country’s business regulatory environment and the inward stock of foreign direct investment (FDI) in fifteen selected countries of Central Eastern and Southeast Europe by using a Mean Group (MG) estimator. The paper found no evidence that a country’s business regulatory environment is a statistically significant predictor of FDI neither in Central Eastern European nor in Southeast European countries. However, the study’s findings recommend that a further increase in FDI in both regions can be achieved by further economic growth, political stability, European Union integration and reduction costs of business regulations.

Keywords

• business regulatory environment
• fdi
• transition countries
• mean group (mg) estimator
• the oli paradigm