ROLE OF ECONOMIC AND POLITICAL FREEDOM IN COUNTRY'S ATTRACTIVENESS OF FOREIGN DIRECT INVESTMENT (FDI): EVIDENCE FROM THE SOUTH EAST EUROPE

Abstract

The aim of this research is to empirically explore impact of economic and political freedom as two nontraditional factors on FDI inflows in eight of South East Europe countries between 2002 and 2020. Accordingly, the study hypothesis that high level of economic and political freedom is positively associated with FDI. The study uses panel data techniques. The obtained findings of the study failed to confirm contribution of economic freedom on FDI in eight South East European countries. It can be explained that a given level of reforms conducted in the field of business freedom, trade freedom, monetary freedom, investment freedom, government size, property rights, freedom from corruption, labour freedom, financial freedom, and fiscal freedom are still lagging from developed countries. On the contrary, the findings confirmed the impact of political freedom on FDI attractiveness and that given level of political freedom contributes to growth of FDI.