Being an investment target in CEE. Country attractiveness and near-shoring

Abstract

The Central Eastern European (CEE) region was relatively popular from foreign direct investors’ perspective after the fall of the iron curtain e.g. because of cheap labour force and reachable resources in relatively good quality (Balázs et al., 2014). Since then, significant changes occurred in the economy of the region, including the great financial crisis (2008/2009) with effects observable for a long time. This paper surveys an answer defining which CEE countries remained appealing for foreign direct investment (FDI), and introduces the notion of a special investment activity, the so called near-shoring, which is also observable in some of the countries in the region. Near-shoring means that companies – because of different reasons (e.g. high operational costs or increasing labour costs in the country where they are present after an outsourcing process) – move their operation into a third country, which is close to its home location (Stehrer et al., 2012; Stentoft, J. et al., 2015). To deliver this answer, the author has used a simplified model based on the idea of the Global Competitiveness Index from Schwab (2016). This model consists of the three main indicators (labour, macroeconomic performance and investment climate) that companies may consider before initiating an FDI activity in CEE, which can also be a near-shoring eventually. The main finding of the paper is a list of the most relevant countries regarding foreign direct investments.