The Contribution of Foreign Direct Investment to Transition Revisited

in The Journal of World Investment & Trade
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The Contribution of Foreign Direct Investment to Transition Revisited

in The Journal of World Investment & Trade

References

A firm can undertake Fm in a host country in two main ways: greenfield investment in a new facility (new site, new machinery and equipment, etc.), or acquiring or merging with an existing local firm; see UNCTAD, 2000, p. 100. In addition to these two modes of entry, the concept of "brownfield investment" can also be found in the literature on FDI in transition economies; see Meyer and Estrin, 1998; and Estrin, Hughes and Todd, 1997. The latter denotes a hybrid situation between greenfield and acquisition, whereby investments that are formally acquisitions, in substance more closely resemble greenfield projects; the foreign investor acquires the firm, but almost completely replaces the plant, the equipment and the product line.

2 FDI flows include the new, additional and subsequent investments carried out in a given calendar year, net of divestments. They arc recorded under the heading of "direct investment, net", in the financial account of the balance of payments. The Fm stock consists of the cumulative Fm inflows recorded since inception, adjusted for depreciation, exchange rate variation, accounting changes and other correcting factors. It is recorded in the international investment position of the country under direct investment assets (outward Fn) stock) and direct investment liabilities (inward FDI stock).

1 From a statistical point of view, the r-square value of correlation can be interpreted as the proportion of variance in the dependent variable (productivity gains) attributable to the variance in the independent variable (foreign share in privatization).

4 See their Web site: ��http: //www. transparency. de/documents/cpi/index. htm]�>. e For definitions of greenfield and brownfield FDI, see supra, footnote 1.

Artisien, Patrick, Matija Rojec, and Marjan Svetlicic (eds.), 1993: Foreign Direct Investment in Central and Eastern Europe, Macmillan, London.

The Banker, 2000: Foreign Banks Still Expanding, April, p. 57.

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Blommestein, Hans J., Michael Marrese, and Salvatore Zecchini, 1991: Centrally Planned Economies in Transition: An Introductory Overview of Selected Issues and Strategies, in OECD, 1991, op. cit.

Dunning, John H., 1993: The Prospects for Foreign Direct Investment in Eastern Europe, in Artisien et al. (eds.), op. cit., pp. 16-33.

EBRD (European Bank for Reconstruction and Development), 1999: Transition Report 1999, London.

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G. Toth, Ilda, 2000: Vállalati fölvásárlások Magyarországon: Nem szerelmi házasságok (Acquisitions in Hungary: Marriages not for Love), HVG, Budapest, Vol. 22, No. 44, 4 November, pp. 78-85.

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Kurtz, Constance and Volker Wittke, 1998: Using Industrial Capacities as a way of Integrating the Central and East European Economies, in Zysman and Schwartz (eds.), op. cit., pp. 63-95.

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United Nations, 2001: World Economic Situation and Prospects 2001, United Nations Department of Economic and Social Affairs, New York, and United Nations Conference on Trade and Development, Geneva.

UNCTAD (United Nations Conference on Trade and Development), 1994: World Investment Report 1994: Transnational Corporations, Employment and the Workplace, United Nations, New York and Geneva.

Idem, 1998: World Investment Report 1998: Trends and Determinants, United Nations, New York and Geneva.

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UNECE (United Nations Economic Commission for Europe), 1994: Overview of the Transition Economies in 1993-1994, in Economic Survey of Europe in 1993-1994, United Nations, New York and Geneva.

Vickers, John and George Yarrow, 1989: Privatization: An Economic Analysis, MIT Press, Cambridge, Massachusetts and London.

Zemplínerová, Alena, 1998: The Role of Foreign Direct Investment in Restructuring and Modernization of the Czech Economy: An Overview of the Literature, Prague, mimeo.

Zysman, John, and Andrew Schwartz (eds.), 1998: Enlarging Europe: The Industrial Foundations of a New Political Reality, Research Series No. 99, University of California, Berkeley.

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