wiiw presents its new analysis of FDI developments: Short-lived Recovery

06  June 2012    11:00 am CEST


wiiw, Rahlgasse 3, 1060 Vienna, lecture hall (entrance from the ground floor)


The Vienna Institute for International Economic Studies (wiiw) presents an analysis of foreign direct investment (FDI) in 22 Central, East and Southeast European countries based on the latest update of its database.

FDI continues to be of great significance for the development of the former transition economies. The domestic engines of economic growth are still weak, and fiscal consolidation provides a drag on the economies. The short-lived recovery in 2011 was based mainly on external demand, which upgraded the importance of foreign investors, as they generate a major part of exports.

The first part of this report, following detailed methodological explanations of FDI related terminology, provides an analysis of the latest FDI trends in 22 CESEE countries. The strongest growth in FDI in 2011 was observed in the SEE countries (64%) following a year with extremely low inflows. The growth of FDI in the NMS was 26% and in the CIS 18%, though both regions still recorded significantly lower amounts than in 2008. FDI inflows declined in only five countries, in line with the general upswing in business sentiment and economic growth, at least up until the fourth quarter of the year.

Methodological problems have been identified that can distort the reporting of the home countries and economic sectors in terms of FDI flows and stocks. Special purpose entities, which are often financial holdings registered in the Netherlands and classified under ‘other business activities’, are the main sources of distortion. Home country statistics and greenfield project data suggest that Austria is the second-biggest investor in the NMS and the biggest in the SEE – one place above its ranking based on FDI stocks statistics. Also, if the Bank of Russia were to subtract the flows of Russian capital via offshore locations from the FDI statistics, Russian FDI would shrink to about a third of what is currently reported.

Forecasts for economic growth and first quarter trends in FDI flows and greenfield projects suggest a setback for FDI in most CESEE countries in 2012, with the possible exceptions of Russia, Estonia and Croatia.The second part of this report contains two sets of tables: the tables in Part I cover FDI flow and stock data, FDI flows by form and related income; the tables in Part II provide detailed FDI data by economic activity and country. The main sources of data are the central banks of the individual Central, East and Southeast European countries.

Das wiiw präsentiert seine aktuelle Analyse der Entwicklung der Auslandsinvestitionenin Zentral-, Ost- und Südosteuropa, sowie den Update der "FDI Database" mitdetaillierten Statistiken über Auslandsinvestitionen in 22 Ländern.