Review of studies on FDI: The case of Baltic States

Abstract

The authors reviewed the foreign direct investment in Baltic countries. The theoretical part of the paper systemizes essential driving forces (elements) of FDI studies and the methods most common in FDI studies; the hierarchy of qualitative methods and models is presented. Three-tier methodology is suggested. The first tier (or level) represents a mathematical approach towards interconnections between FDI variables. The second tier of methodology is dedicated to sector analysis and benchmarking. The third tier targets revising economic variables and their links with variables representing FDI. The suggested approach could be applied for similar analysis. The authors have constructed a correlation matrix. The results of the analyzed variables via the dynamic regression approach show that the strongest links among variables appeared in several-year periods. The obtained results may have significant policy implication.