The Role of Investment Promotion Agencies in Attracting Foreign Direct Investments in the Southeast European Countries

Abstract

This paper aims to assess the role of national and regional agencies in attracting foreign direct investment (FDI) in the Southeast European (SEE) countries and to connect the findings from IPA’s staff with the determinants of FDI inflows. The research is conducted using survey data and panel data analysis. The results indicate small, inadequate, and unexploited potential of investment promotion agencies (IPAs). They have participated in a small number of FDI projects and most of the FDIs came into the region without their participation. They do not have a qualitative approach to FDI. Most of the regional agencies (except in Croatia and Kosovo) do not even envisage cooperation with foreign investors. The panel data research has shown that GDP per capita, wages, inflation (as economic variables), but also enterprise restructuring, tax rates, trade and forex system (institutional variables) have influence on FDI inward stock.