Authors:
Victoria Donu Charles University in Prague

Search for other papers by Victoria Donu in
Current site
Google Scholar
PubMed
Close
and
Martin Janíčko University of Economics in Prague

Search for other papers by Martin Janíčko in
Current site
Google Scholar
PubMed
Close
Restricted access

Institutional quality is commonly cited as a reason that investment infl ows still vary across European countries, despite their economic stabilization following the tumultuous years in the early 1990s. This article tests empirically whether institutional quality has any bearing on the level of investment infl ows into selected groups of European countries. The role of institutions is assessed using Economic Freedom indices from the Heritage Foundation. We construct a panel dataset from 2000–2015 for 35 European countries to apply a fixed-effects and generalized method of moments model framework in the regression benchmark with the metrics from the Heritage Foundation. Results show that although institutional quality has some impact on the level of investment, it is less significant than expected and far less than suggested by the existing theoretical literature. Macroeconomic fundamentals matter more than do institutional factors.

  • Acemoglu, D.Robinson, J. A. (2008): Persistence of Power, Elites, and Institutions. American Economic Review, American Economic Association, 98(1): 267293.

    • Search Google Scholar
    • Export Citation
  • Akçay, S. (2001): Is Corruption an Obstacle for Foreign Investors in Developing Countries? A Cross-Country Evidence. Yapi Kredi Economic Review, 12(2): 2734.

    • Search Google Scholar
    • Export Citation
  • Ali, F.Fiess, N.Macdonald, R. (2008): Do Institutions Matter for Foreign Direct Investment? Department of Economics, University of Glasgow, Scotland, UK.

    • Search Google Scholar
    • Export Citation
  • Álvarez, I. C. (2015): Does Institutional Quality Matter for Trade? Institutional Conditions in a Sectoral Trade Framework. CEPR Discussion Papers, No. 10876.

    • Search Google Scholar
    • Export Citation
  • Arellano, M.Bond, S. R. (1991): Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economic Studies, 58(2): 277297.

    • Search Google Scholar
    • Export Citation
  • Asiedu, E. (2002): On the Determinants of Foreign Direct Investment to Developing Countries. Is Africa Different? World Development Journal, 30(1): 107119.

    • Search Google Scholar
    • Export Citation
  • Aziz, A.Makkawi, B. (2012): Relationship between Foreign Direct Investment and Country Population. International Journal of Business and Management, 7(8): 6370.

    • Search Google Scholar
    • Export Citation
  • Baltagi, B. H.Kao, C. (2000): Nonstationary Panels, Cointegration in Panels and Dynamic Panels: A Survey. Center for Policy Research, Working Paper, No. 16.

    • Search Google Scholar
    • Export Citation
  • Bellak, C.Leibrecht, M.Damijan, J. (2009): Infrastructure Endowment and Corporate Income Taxes as Determinants of Foreign Direct Investment in Central and Eastern European Countries. The World Economy, 32(2): 267290.

    • Search Google Scholar
    • Export Citation
  • Benáček, V.Lenihan, H.Andreosso-O’Callaghan, B.Michalíková, E.Kan, D. (2014): Political Risk, Institutions and Foreign Direct Investment: How do They Relate in Various European Countries. The World Economy, DOI 10.1111/twec.12112

    • Search Google Scholar
    • Export Citation
  • Bevan, A.Estrin, S. (2000): The Determinants of Foreign Direct Investment in Transition Economies. Centre for New and Emerging Markets, London School of Economics, Working Paper, No. 342.

    • Search Google Scholar
    • Export Citation
  • Bissoon, O. (2011): Can Better Institutions Attract More Foreign Direct Investment (FDI)? Evidence from Developing Countries. International Conference of Applied Economics-ICOAE, pp. 5971.

    • Search Google Scholar
    • Export Citation
  • Botrić, V.Škuflić, L. (2006): Main Determinants of Foreign Direct Investment in the Southeast European Countries. Transition Studies Review, 13(2): 359372.

    • Search Google Scholar
    • Export Citation
  • Brada, J. C.Drabek, Z.Mendez, J.Perez, M. F. (2014): Corruption and Multinational Investment: Micro-Foundations and Empirical Evidence. Forum for Research in Empirical International Trade. Working Paper, No. 886.

    • Search Google Scholar
    • Export Citation
  • Busse, M.Hefeker, C. (2005): Political Risk, Institutions and Foreign Direct Investment. HWWA Discussion Paper, No. 315, Hamburg Institute of International Economics.

    • Search Google Scholar
    • Export Citation
  • Carstensen, K.Toubal, F. (2004): Foreign Direct Investment in Central and Eastern European Countries: A Dynamic Panel Analysis. Journal of Comparative Economics, 32(1): 322.

    • Search Google Scholar
    • Export Citation
  • Chakrabarti, A. (2001): The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions. Kyklos, 54(1): 89114.

    • Search Google Scholar
    • Export Citation
  • Daniele, V.Marani, U. (2006): Do Institutions Matter for FDI: A Comparative Analysis of the Mena Countries. MPRA Papers, No. 2426.

    • Search Google Scholar
    • Export Citation
  • Daude, C.Stein, E. (2007): The Quality of Institutions and Foreign Direct Investment. Economics and Politics, 19(3): 317344.

  • Dauti, B. (2015): Determinants of Foreign Direct Investment in South East European Countries and New Member States of European Union Countries. Economic and Business Review, 17(1): 93115.

    • Search Google Scholar
    • Export Citation
  • Demirhan, E.Masca, M. (2008): Determinants of Foreign Direct Investment Flows to Developing Countries: A Cross-Sectional Analysis. Prague Economic Papers, 4: 356369.

    • Search Google Scholar
    • Export Citation
  • Donu, V.Janíčko, M. (2015): Institutional Determinants of Investment Inflows into Transition Economies. Acta Oeconomica Pragensia, 5: 323.

    • Search Google Scholar
    • Export Citation
  • Dorożyńska, A.Dorożyński, T. (2015): Human Capital and FDI in Central Eastern Europe. Managing Global Transitions, 13(2): 151170.

    • Search Google Scholar
    • Export Citation
  • Dumludag, D. (2009): Political Institutions and Foreign Direct Investment Flows into Developing Countries. MPRA Paper, No. 27327.

  • Egger, P.Winner, H. (2006): How Corruption Influences FDI: A Panel Data Study. Economic Development and Cultural Change, 54(2): 459486.

    • Search Google Scholar
    • Export Citation
  • Heritage Foundation (2015): Index of Economic Freedom [online]. Heritage Foundation, www. heritage.org/index/.

  • Holland, D.Pain, N. (1998): The Determinants and the Impact of Foreign Direct Investment in the Transition Economies: A Panel Data Analysis. Project Nr. P96-6086-R, National Institute of Economic and Social Research, London.

    • Search Google Scholar
    • Export Citation
  • Hunady, J.Orviska, M. (2014): Determinants of Foreign Direct Investment in EU Countries – Do Corporate Taxes Really Matter? Procedia Economics and Finance, 12: 243250.

    • Search Google Scholar
    • Export Citation
  • Kemsley, D. (1998): The Effect of Taxes on Production Location. Journal of Accounting Research, 36(2): 321341.

  • Kersan-Šcabić, I. (2013): Institutional Development as a Determinant of FDI Attractiveness in South Eastern Europe. Juraj Dobrila University of Pula, pp. 412.

    • Search Google Scholar
    • Export Citation
  • Keynes, J. M. (1936): The General Theory of Employment, Interest and Money. London: McMillan.

  • Kosztowniak, A. (2017): Verification of the Relationship between FDI and GDP in Poland. Acta Oeconomica, 66(2): 307332.

  • Liang, M.Yoon, S. (2011): The Determinants of Foreign Direct Investment in U.S. Real Estate: An Empirical Analysis. Massachusetts Institute of Technology.

    • Search Google Scholar
    • Export Citation
  • Loree, D. W.Guisinger, S. E. (1995): Policy and Non-Policy Determinants of U.S. Equity Foreign Direct Investment. Journal of International Business Studies, 26(2): 281299.

    • Search Google Scholar
    • Export Citation
  • Nickel, S. J. (1981): Biases in Dynamic Models with Fixed Effects. Econometrica, 49(6): 11471426.

  • North, D. (1990): Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.

  • Piroşcă, G. (2011): Economic Crises and the Complexity of Animal Spirits Modelling. Theoretical and Applied Economics, XVIII(2): 153170.

    • Search Google Scholar
    • Export Citation
  • Porcano, T. M.Price, C. E. (1996): The Effects of Government Tax and Non-Tax Incentives on Foreign Direct Investment. Multinational Business Review, 4: 920.

    • Search Google Scholar
    • Export Citation
  • Pournarakis, M.Varsakelis, N. C. (2002): Foreign Direct Investment in Central and Eastern European Countries: Do Institutions Matter? Presentation at the Eiba Annual Conference, December 2002, Athens, Greece.

    • Search Google Scholar
    • Export Citation
  • Ranjan, V.Agrawal, G. (2011): FDI Inflows Determinants in BRIC Countries: A Panel Data Analysis. International Business Research, 4(4): 255263.

    • Search Google Scholar
    • Export Citation
  • Rodrik, D. (1999): Where Did All the Growth Go? External Shocks, Social Conflict and Growth Collapses. Journal of Economic Growth, 4(December): 358412.

    • Search Google Scholar
    • Export Citation
  • Schleifer, A.Vishny, R. (1993): Corruption. Quarterly Journal of Economics, 108(3): 599617.

  • Sušjan, A.Redek, T.Kostevc, Č. (2007): Foreign Direct Investment and Institutional Environment in Transitional Economies. Transition Studies Review, 14(1): 4054.

    • Search Google Scholar
    • Export Citation
  • Villaverde, J.Maza, A. (2012): Foreign Direct Investment in Spain: Regional Distribution and Determinants. International Business Review, 21(4): 722733.

    • Search Google Scholar
    • Export Citation
  • Wheeler, D.Mody, A. (1992): International Investment Location Decisions: The Case of U.S. Firms. Journal of International Economics, 33(1–2): 5776.

    • Search Google Scholar
    • Export Citation
  • Collapse
  • Expand

Senior editors

Editors-in-Chief: István P. Székely, Dóra Győrffy

Editor(s): Judit Kálmán

Associate Editors

  • Péter Benczúr, Joint Joint Research Center, European Commission
  • Dóra Benedek, International Monetary Fund
  • Balázs Égert, OECD
  • Dániel Prinz, World Bank
  • Rok Spruk, University of Ljubljana, School of Economics and Business, Slovenia

Editorial Board

  • Anders Åslund, Georgetown University and Advisory Council of CASE, USA
  • István Benczes, Corvinus University of Budapest, Hungary 
  • Agnieszka Chłoń-Domińczak, SGH Warsaw School of Economics, Poland
  • Fabrizio Coricelli, University of Siena, Italy
  • László Csaba, Corvinus University of Budapest, Hungary and Central European University, Austria
  • Beáta Farkas, Faculty of Economics and Business Administration, University of Szeged, Hungary
  • Péter Halmai, Budapest University of Technology and Economics, and National University of Public Service, Hungary
  • Martin Kahanec, Central European University, Austria
  • Michael Landesmann, The Vienna Institute for International Economic Studies (WIIW), Austria
  • Péter Mihályi, Corvinus University of Budapest, Hungary
  • Debora Revoltella, European Investment Bank

Corvinus University of Budapest
Department of Economics
Fővám tér 8 Budapest, H-1093, Hungary
E-mail: judit.kalman@uni-corvinus.hu

Indexing and Abstracting Services:

  • CABELLS Journalytics
  • EconLit
  • Elsevier GEO Abstracts
  • GEOBASE
  • Index Copernicus
  • International Bibliographies IBZ and IBR
  • JEL
  • Referativnyi Zhurnal
  • RePEc
  • SCOPUS
  • Social Science Citation Index

 

2023  
Web of Science  
Journal Impact Factor 0.7
Rank by Impact Factor Q3 (Economics)
Journal Citation Indicator 0.23
Scopus  
CiteScore 1.4
CiteScore rank Q3 (Economics and Econometrics)
SNIP 0.385
Scimago  
SJR index 0.218
SJR Q rank Q4

Acta Oeconomica
Publication Model Hybrid
Submission Fee none
Article Processing Charge 900 EUR/article
Printed Color Illustrations 40 EUR (or 10 000 HUF) + VAT / piece
Regional discounts on country of the funding agency World Bank Lower-middle-income economies: 50%
World Bank Low-income economies: 100%
Further Discounts Editorial Board / Advisory Board members: 50%
Corresponding authors, affiliated to an EISZ member institution subscribing to the journal package of Akadémiai Kiadó: 100%
Subscription fee 2025 Online subsscription: 700 EUR / 768 USD
Print + online subscription: 820 EUR / 900 USD
Subscription Information Online subscribers are entitled access to all back issues published by Akadémiai Kiadó for each title for the duration of the subscription, as well as Online First content for the subscribed content.
Purchase per Title Individual articles are sold on the displayed price.

Acta Oeconomica
Language English
Size B5
Year of
Foundation
1966
Volumes
per Year
1
Issues
per Year
4
Founder Magyar Tudományos Akadémia
Founder's
Address
H-1051 Budapest, Hungary, Széchenyi István tér 9.
Publisher Akadémiai Kiadó
Publisher's
Address
H-1117 Budapest, Hungary 1516 Budapest, PO Box 245.
Responsible
Publisher
Chief Executive Officer, Akadémiai Kiadó
ISSN 0001-6373 (Print)
ISSN 1588-2659 (Online)

Monthly Content Usage

Abstract Views Full Text Views PDF Downloads
Sep 2024 33 0 0
Oct 2024 138 0 0
Nov 2024 66 0 0
Dec 2024 27 0 0
Jan 2025 40 0 0
Feb 2025 29 0 0
Mar 2025 0 0 0