FDI Motivations and Their Impacts in Former Soviet Republics

Abstract

The growth of Multinational Enterprises (MNEs) activities through Foreign Direct Investments (FDI) in developed and developing countries have largely attracted the attention of policy makers because of the expected positive impacts they may have on receiving countries. But the relationship between FDI and domestic investment is a controversial issue in the economic literature. This paper examines the motives behind FDI in three former Soviet republic (FSRC) countries based on a survey of 105 enterprises (own survey – 45 enterprises in Georgia). The results indicate that most MNEs in the FSRC operate isolated, maintaining strong links to their parent companies, while minimally cooperating with local firms. For this reason, the possibility for spillovers arising from cooperation with foreign-owned firms in the FSRC is rather low at this time. The most significant problems of the surveyed foreign firms are: risky political and economic environment, bureaucracy, finding a suitable partner the ambiguity of the legal system and the high levels of corruption.



Author Information
Shorena Kurdadze, Caucasus International University, Georgia

Paper Information
Conference: EBMC2016
Stream: F – International Economics

This paper is part of the EBMC2016 Conference Proceedings (View)
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