Determinants of International Flows

During the last two decades foreign direct investment(FDI) in the world economy has increased 10 times,while trade increased by a factor of 3. Theseinternational flows have been perceived vital foreconomic growth. The first chapter of the bookexplores characteristics of transition economies thatattract FDI while the second deals with exports oflabor-intensive products from developing countries.From the beginning of the transition processexpectations were that very well educated labor forceand relatively low labor costs will be the mainattractive forces. Surprisingly, experience has shownthat this has not happened. Results of this analysisprove that only after transition process has reachedcertain level, low labor costs become significant forFDI inflows. Further, this work also shows that theabundance of low skilled labor (as expected), butalso of capital and the state of transportationinfrastructure are crucial for success in export oflabor-intensive products. This analysis sheds lighton the important questions of FDI and trade, andshould especially be useful to researchers, or anyonewho may have intellectual interest in contemporaryinternational issues.

Autorentext

Jasminka Ninkovic, Ph.D.: Studied economics at Belgrade University and Emory University. Worked as researcher at Foreign Trade Research Institute and Institute for Economic Sciences in Belgrade. Currently, Assistant Professor at Oxford College of Emory University. Research interests: international economics and macroeconomics.

Klappentext
During the last two decades foreign direct investment (FDI) in the world economy has increased 10 times, while trade increased by a factor of 3. These international flows have been perceived vital for economic growth. The first chapter of the book explores characteristics of transition economies that attract FDI while the second deals with exports of labor-intensive products from developing countries. From the beginning of the transition process expectations were that very well educated labor force and relatively low labor costs will be the main attractive forces. Surprisingly, experience has shown that this has not happened. Results of this analysis prove that only after transition process has reached certain level, low labor costs become significant for FDI inflows. Further, this work also shows that the abundance of low skilled labor (as expected), but also of capital and the state of transportation infrastructure are crucial for success in export of labor-intensive products. This analysis sheds light on the important questions of FDI and trade, and should especially be useful to researchers, or anyone who may have intellectual interest in contemporary international issues.