The impact of host investment conditions in Bulgaria on inward foreign direct investment patterns and strategy : the study of Greek FDI activity in Bulgaria
Considering current trends and developments in, the European economical-political structures, the study of transition and its immediate implications on cases such as inward foreign direct investment (FDI) under the conditions of a post-communist environment gains particular research interest. Central-Eastern European (CEE) transition economies including the case of Bulgaria that is the focus of research within this Thesis, become a pole of attraction for new economic activity, and render the investigation and understanding of related research areas as of immense significance in contributing to the update of theoretical conceptualizations and further providing a basis of information for real life practices of investment orientation and strategy. The existing literature on inward FDI in the case of CEE transition countries is characterized by broad generalizations that are unable to capture the specifications and interesting differentiations that exist across these countries, and only country-specific research can reveal. The primary aim of this research is to take into consideration the existing generic framework of transition 'theorization and explore the extent of applicability in a single country approach. For this purpose, this research focuses on the country of Bulgaria and the study of inward Greek FDI activity. The central aim is to examine inward FDI activity in Bulgaria in terms of strategy and decision-making, and furthermore to provide a parallel assessment of the dominant conditions and characteristics of the host investment environment. The ultimate purpose of this study is to identify 'which aspects of the host investment environment have an effect, and to what extent, on FDI decisions'. Accordingly, a theoretically grounded model has been constructed in order to test the relationships between different aspects of the host investment environment in Bulgaria and FDI decisions relevant to forms, patters and strategy of the activities established in Bulgaria. The research contribution of this study comprises of three elements referring to the proposed research model, the relevant theoretical contributions and the emerging policy implications. The importance of the research model lies on the proposition that it can be applied in other transition countries in order to explore inward FDI patterns and processes, and accordingly provide a common platform upon which to base comparative research on the theorization of FDI in transition economies. In terms of theoretical substance, this study confirms the existing literature on the importance of parameters relevant to: the institutional environment; the principles advocated in Dunning's Eclectic Paradigm; and, CEE-specific FDI determinants referring to unit labour costs, host market size, the progress in transition reformations, and European Union accession. Research findings further align to the importance of market¬related advantages that are increasingly replacing factor costs as the prime determinant of FDI activity, but extend to highlight the importance of low market competition. Additionally, the study confirms the significant relationship between the timing of investment decisions and changes in the business environment. Respectively, research findings indicate a crucial deviation from the traditional FDI theorisation on the issue of country risk, and further raise concerns on the importance placed on low costs and the relevant implications on FDI operations. Therefore, the findings of this research consist an important contribution in providing a guideline of policy implications that can be used by: a) Potential new foreign investors considering to establish activities in Bulgaria b) Existing investors so as to reflect on the current dominant FDI patterns and conditions, the respective elements of concern or the rise of new opportunities that surface from this research; c) Governments in identifying measures that can constitute propositions for formulating policy under the objective of improving host investment conditions, and subsequently create a more attractive environment for FDI activity.