China and Central and Eastern European Countries : Regional Networks, Global Supply Chain, or International Competitors?

China has emerged as one of the top recipients of foreign direct investment in the world. Meanwhile, the successful transition experience of many Central and Eastern European countries has also allowed them to attract an increasing share of global foreign direct investment. In this paper, the authors use a panel data set to investigate whether foreign direct investment flows to these two regions are complements, substitutes, or independent of each other. Taking into account the role of host country characteristics - such as market size, degree of trade liberalization, and human capital - the authors find no evidence that foreign direct investment flows to one region are at the expense of those to the other. Instead, the results suggest that foreign direct investment flows are driven by distinct regional production networks (and thus are largely independent of each other) and the development of global supply chains (indicating that foreign direct investment flows are complementary).

Bibliographic Details

Main Authors:	Fung, K.C., Korhonen, Iikka, Li, Ke, Ng, Francis
Language:	English
Published:	World Bank, Washington, DC 2008-08
Subjects:	ACCOUNTING, ADVANCED COUNTRIES, ADVANCED ECONOMIES, AFFILIATED ORGANIZATIONS, ARBITRATION, BALANCE OF PAYMENTS, BANKING SYSTEM, BENCHMARK, BILATERAL TRADE, BOND, BUREAUCRATIC QUALITY, BUSINESS ENVIRONMENT, CAPITAL FLOW, CAPITAL INVESTMENT, CAPITAL MARKET, CAPITAL MARKETS, CENTRAL PLANNING, CHECKS, COMPARATIVE ADVANTAGE, COMPARATIVE ADVANTAGES, COMPARATIVE ECONOMICS, CORPORATE TAX, CORPORATE TAX RATES, COUNTRY MARKETS, COUNTRY RISK, CREDIBILITY, DECISION MAKING, DEMOCRATIC ACCOUNTABILITY, DEVELOPMENT BANK, DEVELOPMENT ECONOMICS, DIRECT INVESTMENT INFLOWS, DOMESTIC FIRMS, DOMESTIC MARKET, DUMMY VARIABLE, EAST EUROPE, EAST EUROPEAN, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC COOPERATION, ECONOMIC DEVELOPMENT, ECONOMIC EXPANSION, ECONOMIC GEOGRAPHY, ECONOMIC GROWTH, ECONOMIC REFORMS, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EXCHANGE RATES, EXOGENOUS VARIABLES, FDI, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL INSTABILITY, FINANCIAL RISKS, FINANCIAL STABILITY, FINANCIAL SYSTEM, FOREIGN CAPITAL, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN TRADE, FREE MARKET ECONOMY, GDP PER CAPITA, GLOBAL BANKING, GLOBAL ECONOMY, GLOBAL PRODUCTION NETWORK, GLOBALIZATION, GOVERNMENT FINANCE, GROWTH RATE, HORIZONTAL LINKAGE, HOST COUNTRIES, HOST COUNTRY, HOST ECONOMY, HOST-COUNTRY, HUMAN CAPITAL, INCOME, INCOME TAX, INCOME TAX RATE, INCREASING RETURNS, INSTITUTIONAL ENVIRONMENT, INSTRUMENT, INTERNATIONAL BANK, INTERNATIONAL BUSINESS, INTERNATIONAL ECONOMICS, INTERNATIONAL INVESTMENT, INTERNATIONAL INVESTORS, INTERNATIONAL TRADE, INVESTING, INVESTMENT ENVIRONMENT, INVESTMENT FLOW, INVESTMENT FLOWS, INVESTMENT LOCATION DECISIONS, INVESTMENT REGULATIONS, LATIN AMERICAN, LAW ENFORCEMENT, LOCAL CURRENCIES, LOCAL CURRENCY, LOCAL ECONOMY, LOCAL MARKET, LONG-TERM CAPITAL, LONG-TERM INVESTMENT, MACROECONOMIC CONDITIONS, MANUFACTURING SECTOR, MARKET SIZE, MERGERS, MNE, MONETARY FUND, MULTINATIONAL CORPORATIONS, MULTINATIONAL ENTERPRISE, MULTINATIONAL ENTERPRISES, MULTINATIONAL FIRMS, NEWLY INDUSTRIALIZED COUNTRIES, OPEN DOOR POLICY, OUTSOURCING, POLITICAL ECONOMY, POLITICAL RISK, POLITICAL STABILITY, POSITIVE COEFFICIENT, POSITIVE EFFECTS, POSITIVE EXTERNALITIES, POTENTIAL INVESTORS, PRIVATIZATION, PRODUCTION COSTS, PRODUCTIVITY GROWTH, PROFIT MARGIN, PURCHASING POWER, RAPID GROWTH, REAL ESTATE, REAL GDP, REGIONAL INTEGRATION, REGULATORY RESTRICTIONS, RETURNS, STRUCTURAL CHANGE, TAX, TAX EXEMPTIONS, TAX INCENTIVES, TAX POLICIES, TAX POLICY, TAX RATE, TECHNOLOGY SPILLOVERS, TELEPHONE LINES, TOTAL REVENUE, TRADE BARRIERS, TRADE LIBERALIZATION, TRANSITION ECONOMIES, TURNOVER, VERTICAL LINKAGES, VERTICAL MULTINATIONAL, WAGE GROWTH, WAGE RATES, WAGES, WORLD DEVELOPMENT INDICATOR, WORLD DEVELOPMENT INDICATORS, WORLD ECONOMY, WORLD INVESTMENT REPORT, WORLD TRADE, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2008/08/9755730/china-central-eastern-european-countries-regional-networks-global-supply-chain-or-international-competitors https://hdl.handle.net/10986/6809
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