Foreign Direct Investment Motives and the Match with Locational Conditions in Central East Europe

Abstract

The analysis in this chapter focuses on the two central aspects of inward FDI: strategic investment motives and locational factors. Their relative importance over host countries in CEE, regions of origin, year of engagement etc. is described to present a more realistic picture of the dominant investment motives prevailing in CEECs. Next, investment motives are compared to locational advantages to test the extent of correspondence at the firm level between what the motives imply in terms of locational factors and the motive itself. This is derived from theory of international production (e.g. Cantwell and Iammarino, 1998, 2003) and the international management literature (e.g. von Zedtwitz and Gassman, 2002; Andersson et al., 2002) that shows that the strategy followed by a foreign investor depends not only on internal considerations but also on the endowment of the host economy or region with locational factors.