Comparative study regarding the evolution of the foreign direct investments in central and eastern Europe region's countries.

International audienceIn this paper, we question whether there is a catch-up effect or announcement effecting Foreign Direct Investment (FDI) from the European Union (EU) to the ten EU accession countries. We study FDI outflows for Romania, a small economy with few historical ties to Eastern Europe, and compare FDI in the transition countries in Central and Eastern Europe to FDI in other regions - most notably to transition countries in Central Asia. In our analysis we try to impose as little structure as possible on the data and allow for heterogeneity within the different regions. In an effort to improve on past studies in the same area, we use a very broad sample of countries; we present country-specific results. We will try to show that economic fundamentals explain differences in inward investment in the region. FDI and trade are mostly complementary and there is no evidence that there is crowding out between region