Eastern Enlargement of the European Union and Foreign Direct Investment Adjustments

Abstract

The purpose of this paper is to examine the changes that have occurred in the course and in the geographical structure of direct investment in the present and future members of the EU during the nineties and trying to explain their determining factors. To this end, a gravitational model is estimated incorporating the ideas developed recently in the Economic Geography models. In view of the fact that a process of liberalisation of the investment flows between the Fifteen and candidates has taken place during these years - in the framework of the Association Agreements - it may be contended that the explanation for what has happened so far represents key information for predicting the adjustments that may occur in the coming years, when the candidates become full members of the Union. JEL: F02, F2, F21