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<p>The paper evaluates the relationship between the indicators of competitiveness of national economies (real unit labour costs and Global Competitiveness Index) and the flow of FDI in Central and Eastern Europe (CEE) over the last two decades. Our results show that from 2000 to 2020, CEE economies had an average annual inflow of FDI of 3.9% of GDP, with significant variation across the region. We have found out that the relationship between the net inflow of FDI and the real unit labour costs was strongly negative, while the results on the link with the Global Competitiveness Index was less conclusive. In 2020, due to pandemic global flow of FDI, shrank by around 40%, while the net inflow of FDI to CEE countries declined on average by 15%. These trends and results of survey-based analyses from other studies suggest that CEE region, and especially the Western Balkans countries, may benefit from the nearshoring process in the future. To exploit that opportunity, they may need to put focus of their policies on efficiency-enhancing tax reforms (that would reduce the unit labour costs) and other structural reforms that would result in improvement of the stock and quality of their physical and human capital.</p>
</abstract>

The paper evaluates the relationship between the indicators of competitiveness of national economies (real unit labour costs and Global Competitiveness Index) and the flow of FDI in Central and Eastern Europe (CEE) over the last two decades. Our results show that from 2000 to 2020, CEE economies had an average annual inflow of FDI of 3.9% of GDP, with significant variation across the region. We have found out that the relationship between the net inflow of FDI and the real unit labour costs was strongly negative, while the results on the link with the Global Competitiveness Index was less conclusive. In 2020, due to pandemic global flow of FDI, shrank by around 40%, while the net inflow of FDI to CEE countries declined on average by 15%. These trends and results of survey-based analyses from other studies suggest that CEE region, and especially the Western Balkans countries, may benefit from the nearshoring process in the future. To exploit that opportunity, they may need to put focus of their policies on efficiency-enhancing tax reforms (that would reduce the unit labour costs) and other structural reforms that would result in improvement of the stock and quality of their physical and human capital.

National Competitiveness and Foreign Direct Investment in Emerging Europe

Economic Themes

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"National Competitiveness and Foreign Direct Investment in Emerging Europe"}

The paper evaluates the relationship between the indicators of competitiveness of national economies (real unit labour costs and Global Competitiveness Index)...

National Competitiveness and Foreign Direct Investment in Emerging Europe

Published Online: Aug 05, 2022

Page range: 21 - 40

Received: Dec 27, 2021

Accepted: Mar 24, 2022

DOI: https://doi.org/10.2478/ethemes-2022-0002

Keywords
national competitiveness, foreign direct investment, emerging Europe, global competitiveness index, real unit labour costs

© 2022 Saša Ranđelović et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

National Competitiveness and Foreign Direct Investment in Emerging Europe

Published Online: Aug 05, 2022

Page range: 21 - 40

Received: Dec 27, 2021

Accepted: Mar 24, 2022

DOI: https://doi.org/10.2478/ethemes-2022-0002

Keywordsnational competitiveness, foreign direct investment, emerging Europe, global competitiveness index, real unit labour costs

© 2022 Saša Ranđelović et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
national competitiveness, foreign direct investment, emerging Europe, global competitiveness index, real unit labour costs