Estonia and the two other Baltic states —Latvia and Lithuania— are Emerging Europe’s winners of the Milken Institute’s Global Opportunity Index — Attracting Foreign Investment across four broad categories: economic fundamentals, ease of doing business, quality of regulation, and rule of law. Estonia ranked 12th and was followed by Latvia (29th) and Lithuania (37th). The leader got its highest note for the quality of regulations, Latvia and Lithuania — for the ease of doing business.
The three leaders were followed by Slovenia, the Czech Republic, Montenegro, Hungary and Armenia — also in the top 50. Poland, Emerging Europe’s largest economy, ranked 51st.
“The higher the country scores in the index, the greater the inflow of foreign direct investment. With the pending normalisation of monetary policy by developed countries, it will be more important than ever that developing countries are attractive places for investment. We hope our Global Opportunity Index helps both countries and companies understand the most productive policies and investment opportunities,” says Heather Wickramarachi, the Milken Institute’s Economist and co-author of the ranking.
The Opportunity Index is designed to assist companies and countries as they explore FDI opportunities. It not only considers basic economic variables that influence investment activity, but also examines key business, legal, and regulatory policies that governments can modify to support and often drive FDI. It is built on a solid foundation, with strong theoretical and empirically tested underpinnings based on numerous studies. Accompanying the report, a web tool, provides full access to the rankings in each of the four categories, with an interactive feature that allows users to customise the rankings, screening for the investment factors that matter most to them.
The authors claim that each one-unit increase in index score is associated with a 42 per cent increase in FDI per capita and a 55 per cent increase in international portfolio flows.
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