Is FDI Taking the Orient Express?

Abstract

Is foreign direct investment crossing Europe towards the East? During the last few years, news of foreign direct disinvestments have regularly emerged on the Portuguese media. The group of suspects have been identified as the new European Union members, where low wages, low corporate taxes and a highly educated labour force seems to attract multinationals eager to cut costs in an economy slowly recovering from recession. The clues of investment displacements abound, but no definite proof has yet been found in the empirical literature. This paper considers the available evidence, contributing to avoid possibly unfair incriminations.