Evaluation of the Investment Development Path concept in selected Baltic Sea Region states: Where are we?

Abstract: In the European Union (EU), there are four Baltic Sea Region (BSR)states – Estonia, Latvia, Lithuania, and Poland – which are interlinked by thefollowing facts: the common moment of obtaining EU membership, a commonhistorical path from communism to democracy, and being part of theBSR. Although the selected countries share common roots, it seems that, interms of the economic development, they may follow a different path. Investmentdevelopment path (IDP), a concept developed by J.H. Dunning, stressesthat the development of a country is a result of being an active exporter ofcapital. This paper aims to evaluate the progress of the four selected economiesin terms of their IDP. The analysis takes into consideration their peculiareconomic determinants. The methods used include quantitative and qualitativemethods. Among the qualitative methods, a literature review brieflypresents Dunning’s IDP paradigm. The review of existing empirical researchhighlights the contributions of the paper. The quantitative methods cover thestatistical data illustrating the progress of the selected countries in terms ofthe IDP. The data were obtained from United Nations Conference on Tradeand Development (UNCTADStat) and Eurostat. The BSR states under investigationdiffer in terms of their economic growth. However, they share a commondenominator of maintaining the role of importer of capital. The highestdynamics of the growth of the outward stock of Foreign Direct Investment(FDI) was observed in Poland and Lithuania. It is Poland and Estonia, however,that seemingly will climb on the ladder of IDP faster than Latvia and Lithuania.In all cases, these countries deal with higher dynamics of annual growthof Outward Foreign Direct Investment (OFDI) than Inward Foreign Direct Investment(IFDI), which suggests that all are at the third stage of IDI. However,

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