Business and Economics Journal

The Role of Institutions and Good Governance for Attracting Foreign Direct Investments: Evidence from Southeast Europe

Abstract

Valbona Zeneli

Institutional infrastructure and governance play a critical role in attracting foreign investments. This is especially true in transition countries. This paper examines the role of Foreign Direct Investment (FDI) in South Eastern European Countries during the 1992-2010 timeframe. Using GMM estimations applied to dynamic panel data, visibility into regional foreign investments highlight the role of institutions as well as the distinctions between total FDI and Non-Privatization related FDI. The empirical data point to the importance of the quality of the institutions and the role of the privatization process in these countries.