Institutions in transition: Is the EU integration process relevant for inward FDI in transition European economies?

This research challenges the contemporary view of economic policy makers in transition European economies that the EU integration process will lead to a greater inflow of Foreign Direct Investments (FDI), thereby increasing living standards. With the Brexit referendum, the integration of the EU has been threatened by a distressing existential question: is EU membership valuable for transition countries if even developed countries (like the UK) vote to leave or decided not to align like Switzerland and Norway in the past? Our analysis considers the success of several countries in Eastern Europe in attracting and benefiting from FDI on their way to EU membership. Analyzing a 13-year panel data of 16 transition countries, we found no statistically significant positive association between FDI inflow and EU accession. We argue, that it is also important to consider the welfare for domestic economies that can emerge from those investments. We illustrate this through the case study of a successful combination of institutional development and local content policies implementation accompanied by sufficient FDI inflows in a non-EU country - Kazakhstan

Multinationals And Wages: Evidence From Employer–Employee Data In Serbia

Many studies have reported that foreign-owned companies pay higher wages on average than domestic companies. However, this can be attributed to the different composition of the workforce or to a wage premium at the individual worker level. This paper contributes to this literature by observing whether individuals that change their job from a domestic to a foreign- owned company experience a change in their wages. Furthermore, it investigates whether this difference in wage patterns is moderated by workers’ education. This paper is one of the very few micro-econometric studies that deal with this question in a transition country, Serbia, using employer- employee data on the private sector over a long time period (15 years). Changing jobs is found to be positively associated with workers’ wages: the change in wages is higher when moving from a domestic to a foreign company than vice versa. The evidence suggests that more-educated workers benefit the most from leaving domestic companies