The effect of regulatory incentives on bilateral foreign direct investment

Abstract

In general, the promotion of foreign direct investment (hereinafter “FDI”) is considered to be one of the positive measures influencing MNCs decisions to invest in a country. Regulation is treated as a negative aspect in attracting FDI. However, regulation is employed in approving investments, managing incentives and issuing permits, which are seen as promotion tools. The authors are trying to answer the question whether promotion can exist together with regulation and have a positive effect on FDI flows. The article aims to determine the influence of regulatory incentives on inward FDI. Central and Eastern European countries have been chosen for the purpose of empirical analysis.