Indeed, foreign direct investments remain main concern as major source of capital directed toward enterprise restructuring. What we are closely examining are the effects of foreign direct investments on the development of domestic firms and the overall economy. The World Bank has conducted Enterprise Surveys on many countries using firm-level data of a representative sample of economy’s private sectors. Hence, six countries have been taken as sample for this research: Albania, Bosnia and Herzegovina, Croatia, Macedonia, Serbia and Slovenia. The study is to be focused on probing effects of foreign direct investments in Southeast Europe economies. Additionally, according to the results, estimates are specified on the ways foreign direct investments mold the economy. This research is built on Cobb–Douglas production function where data are analyzed with econometric models, which as employed in this study examines the interrelationships between output and set of variables that influence foreign direct investments arrangements. Hence, foreign direct investments remain main concern as major source of capital utilized toward enterprise restructuring. Transition economies undergo a set of structural transformations intended to develop market-based institutions through economic liberalization, where prices are set by market forces. Foreign direct investment is usually defined as dominant or controlling ownership of a company in one country, by an entity based in another country.
The model is based on firm-level data of a representative sample of economy’s private sectors for Albania, Bosnia and Herzegovina, Croatia, Macedonia, Serbia and Slovenia. Using World Bank Microdata Library and specifically Enterprise Surveys, we take a sample of six countries. In this research, we focus on effects of foreign direct investments in Southeast European economies.
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