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Determinants of International Flows. Edition No. 1
VDM Publishing House, Sep 2008, Pages: 120
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.
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