Proceedings of the 5th International Conference on New Ideas in Management, Economics and Accounting
An explanation for the Chinese interest in investing in the new EU Member States. A fixed effects panel data analysis
Oana Cristina Popovici
The present study deals with FDI determinants in the new EU Member States from Central and Eastern Europe from investment flows originating from China. The bounds between China and the CEE region were enhanced in 2011, once with the announcement, in Budapest, of the 16+1 framework of cooperation and its entering into force in 2012, while the launch of the One Belt One Road Initiative is meant to further strengthening the cooperation with the CEE countries. The study is investigating the special theoretical framework for explaining Chinese FDI outflows and for establishing the corresponding main FDI determinants. The empirical part is focused on building six panel models with fixed effects encompassing five CEE countries (Bulgaria, the Czech Republic, Hungary, Poland and Romania) for testing FDI determinants and the main motivations of investors from China during the period 2005-2015. Our main results confirm that the dimension of the market has the strongest impact on attracting FDI from China. In addition, Chinese investors are also targeting a certain type of strategic resource – the qualified labor force, which enable them to gain practical information and skills – and are looking for efficiency-seeking locations.
Keywords: foreign direct investment, new EU Member States, China, market-seeking investments.