Historical Legacies and Foreign Direct Investment in Bosnia and Herzegovina

Open access

Historical Legacies and Foreign Direct Investment in Bosnia and Herzegovina

This paper examines the origins of foreign direct investment (FDI) in Bosnia and Herzegovina (BiH) with special reference to historical legacies. BiH is a very interesting case because of its position on the frontier of Europe, a region with a rich cultural history marked by alternating periods of coexistence and violence. Because the country has spent time under the Ottoman, Austro-Hungarian, and Yugoslav flags, particular attention is paid to the role of history in impacting inflows of FDI. Five models are specified using various dependent variables to measure FDI, and all uphold the importance of historical legacies and cultural proximity. Equally interesting is the absence of significance among traditional gravity variables in this unique investment landscape. Policy implications include the need for government to assist firms in overcoming concern about instability, corruption, and a complex permitting process. As little has been published on FDI in BiH, future research suggestions are presented.

Balasubramanyam' V.N, M. Salisu' David Sapsford. 1999. Foreign Direct Investment as an Engine of Growth. Journal of International Trade and Economic Development. 8(1) 27-40.

Bandelj, Nina. 2002. How EU Integration and Legacies Mattered for Foreign Direct Investment into Central and Eastern Europe. Europe-Asia Studies. 62 (3), 481-501.

Bandelj, Nina. 2010. Embedded Economies: Social Relations as Determinants of Foreign Direct Investment in Central and Eastern Europe. Social Forces. 81 (2) 411-444.

Bevin, Alan A, and Saul Estrin. 2004: The Determinants of Foreign Direct Investment into European Transition Economies. Journal of Comparative Economics. 32, 775-787.

Bitzenis, Aristidis. 2004. Explanatory Variables for Low Western Investment in Bulgaria. Eastern European Economics. 42 (6), 5-38.

Blonigen, Bruce. 2005. A Review of the Empirical Literature on FDI Determinants. Atlantic Economic Journal. 33 (December), 383-403.

Bosnia and Herzegovina Federal Office of Statistics. 2010. Statistical Yearbook. http://www.fzs.ba/Eng/gode.htm

Botrić, Valerija, and Lorena Škuflić. 2006. Main Determinants of Foreign Direct Investment in the Southeast European Countries. Transition Studies Review. 13 (2), 359-377.

Brada, Josef C., Ali M. Kutan, and Taner M. Yigit. 2006. The Effects of Transition and Political Instability on Foreign Direct Investment Flows: Central Europe and the Balkans. Economics of Transition. 14 (4), 649-680.

Business Monitor International. 2010. Country Risk Analysis for Bosnia and Herzegovina (Q4). http://www.businessmonitor.com/

Deichmann, Joel I. 2010. Origin-Effects and Foreign Direct Investment in the Czech Republic: The Role of Government Promotion Abroad. Comparative Economic Studies 52, 249-272.

Demekas, Demekas G., Baláz Horváth, and Elina Ribakova. 2007. Foreign Direct Investment in European Transition Economies- The Role of Policies. Journal of Comparative Economics. 35, 369-386.

Dunning, J. 1980. Toward an Eclectic Theory of International Production: Some Empirical Tests, Journal of International Business Studies. 11: 9-31.

Economist. 2011. No more Brussels bluff: The European Union should get on with admitting the better-run countries from the western Balkans. June 2nd. Available at: http://www.economist.com/node/18774816

Dunning, J. H. 1998. Location and the multinational enterprise: A neglected factor? Journal of International Business Studies. 29 (1): 45-66.

EBRD (European Bank for Reconstruction and Development). 2011. Transition Report Crisis in Transition: The People's Perspective. Available at http://www.ebrd.com/pages/research/publications/flagships/transition.shtml

Friedman, Thomas. 2005. The World Is Flat: A Brief History of the Twenty-First Century. New York: Farra, Straus, and Giroux.

Grosse, Robert, and Len Trevino. 1996. Foreign Direct Investment in the United States: An Analysis by Country of Origin. Journal of International Business Studies. 27 (1), 139-155.

Hunya, Gábor. 2002. FDI in South-Eastern Europe in the Early 2000s. The Vienna Institute for International Economic Studies (WIIW). Available at: http://www.africacommitments.org/dataoecd/52/30/1940829.pdf

Hunya, Gábor. 2010. Database on Foreign Direct Investment in Central, East and Southeast Europe, 2010: FDI in the CEECs Hit Hard by the Global Crisis. Vienna Institute for International Economic Studies. http://publications.wiiw.ac.at/files/pdf/FDI/fdi_may10_contents.pdf, downloaded 14 October 2011. http://publications.wiiw.ac.at/files/pdf/FDI/fdi_may10_contents.pdf

Isard, Walter. 1975. A simple Rationale for Gravity Model Type Behavior. Papers of the Regional Science Association. 35, 25-30.

Janicki, Hubert, and Phanindra V. Wunnava 2004. Determinants of foreign direct investment: empirical evidence from EU accession candidates. Applied Economics. 36 (5), 505-509.

Kekic, Laza. 2005. Foreign Direct Investment in the Balkans: Recent Trends and Prospects. Journal of Southeast Europe and Black Sea Studies 5 (2), 171-190.

Kleinert, Jőrn, and Farid Toubal. 2010. Gravity for FDI. Review of International Economics. 18 (1), 1-13.

Koyama. Yoji. 2008. Transition, European Integration and Foreign Direct Investment in Central and Eastern European Countries. Niigata: Shinkousoku Printing Co., Ltd.

Meredith, L. and D. Maki. 1992. The United States Export and Foreign Direct Investment Linkage in Canadian Manufacturing Industries. Journal of International Business Studies. 24: 73-88.

Mustafic-Cokoja, Dika. 2010. Interview with Senior Advisor of Foreign Investment Promotion Agency (FIPA), Sarajevo, Bosnia and Herzegovina. November 5.

O'hUallacháin, Breandán and Nigel Reid. 1992. Source country differences in the spatial distribution of foreign direct investment in the United States. The Professional Geographer. 44: 272-285.

Rodríguez-Pose, Andrés, and Riccardo Crescenzi. 2008. Mountains in a flat world: why proximity still matters for the location of economic activity. Cambridge Journal of Regions, Economy and Society. 1, 371-388.

Vogel, Toby. 2011. Global FDI rebounding after three-year decline. EuropeanVoice On-Line. www.europeanvoice.com. Accessed 28 July. www.europeanvoice.com

World Trade Organization. 1996. Trade and Foreign Direct Investment. PRESS/57 9 October 1996. Available at: http://www.wto.org/english/news_e/pres96_e/pr057_e.htm

Zademach, Hans-Martin, Andrés Rodríguez-Pose. 2009. Cross-Border M&As and the Changing Economic Geography of Europe. European Planning Studies, 17 (5) 765 - 789

South East European Journal of Economics and Business

The Journal of University of Sarajevo

Journal Information

CiteScore 2018: 0.86

SCImago Journal Rank (SJR) 2018: 0.224
Source Normalized Impact per Paper (SNIP) 2018: 0.395

Cited By


All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 284 243 17
PDF Downloads 76 68 5