Received:
2018-05-10 | Accepted:
2018-08-10 | Published:
2018-12-30
Title
State aid and investment: case of Slovakia
Abstract
State investment incentives are detrimental to the quality of the business environment and create unequal starting conditions for entrepreneurs to implement investment plans. In some cases, however, it is necessary to regulate the allocation of inward investment to regions within one country and thus decrease the disparities. Investment incentives are instruments that in general might violate market principles and thus are regulated within the EU internal market. Despite being aware of this fact most economists and politicians advocate these kinds of measures as necessary and relatively cheap in order to push the economy forward or win international big private equity investments. Investment aid is regional aid to stimulate investment in disadvantaged regions and to create new jobs in the Slovak Republic. Beneficiaries of this assistance may be natural and legal persons authorized to carry on business in the territory of the Slovak Republic and whose investment activities and projects meet the conditions of Act no. 561/2007 Z.z. on Investment Assistance and on Amendments to Certain Acts. This paper will focus on how investment incentive attracts foreign investment in the Slovak Republic and based on the data from 2002 to 2017 we will analyze their effectiveness on the created jobs. Despite the possible support from the Slovak government not all foreign investors areapplying for investment incentives, either are in contact with the government during their investment phase.
Keywords
investments incentives, stare aid, foreign direct investmnets, economic growth
JEL classifications
E22
, F21
, F43
URI
http://jssidoi.org/jesi/article/232
DOI
Pages
480-488
Funding
The paper is the output of an international scientific project IGA no. 2/2018 - M „Problems and Suggestions - Comparison of Commercial Enviroment between China - Slovakia and Facilitation of Trade and Investment”. (Funder: VSEMvs IGA VSEMvs, i.e. School of Economics and Management in Public Administration)
This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License
References
Belanova, K. (2014, January). Kvalita podnikatelskeho prostredia v krajinách Vysehradskej stvorky a osobitnym akcentom na dostupnost financnych zdrojov [Quality of the business environment in the Vysehrad countries and special emphasis on the availability of financial resources] Biatec. (in Slovak). http://www.nbs.sk/_img/Documents/_PUBLIK_NBS_FSR/Biatec/Rok2014/01-2014/03_biatec14-1_belanova.pdf
Search via ReFindit
Bevan, A., & Estrin, S. (2000, October). The Determinants of Foreign Direct Investment in Transition Economies. Centre for New and Emerging Markets, London Business School 2001. http://deepblue.lib.umich.edu/bitstream/handle/2027.42/39726/wp342.pdf?sequence=3
Search via ReFindit
Bevan, A., Estrin, S., & Meyer, K. (2004, February). Foreign investment location and institutional development in transition economies. International Business Review, 13(1), 43-64. http://www.sciencedirect.com/science/article/pii/S0969593103001082
Search via ReFindit
Brakman, S., Garretsen, H. (2008). Foreign direct investment and the multinational enterprise. Association for evolutionary economics. http://mitpress.mit.edu/sites/default/files/titles/content/9780262026451_sch_0001.pdf
Search via ReFindit
Cheba, K., & Szopik-Depczyńska, K. (2017). Multidimensional comparative analysis of the competitive capacity of the European Union countries and geographical regions. Oeconomia Copernicana, 8(4), 487-504. https://doi.org/10.24136/oc.v8i4.30
Search via ReFindit
Dudas, T. (2004, March). Stav politickeho prostredia ako faktor investicnej atraktivnosti v statoch strednej a vychodnej Europy [The state of the political environment as a factor of investment attractiveness in the states of Central and Eastern Europe. Journal of Intenational Relations], 2(2), 68-74. (in Slovak). http://econpapers.repec.org/-article/brvjournl/v_3a2_3ay_3a2004_3ai_3a2_3ap_3a68-74.htm
Search via ReFindit
Dudas, T. (2010). Priame zahranicne investicie v slovenskej ekonomike [Direct foreign investment in the Slovak economy]. Bratislava: Vydavatelstvo EKONOM (in Slovak).
Search via ReFindit
Dunning, J. H. (1979, November). Explaining changing patterns of international production: in defence of the eclectic theory. Oxford Bulletin of Economics and Statistics, 41(4), 269-295. https://doi.org/10.1111/j.1468-0084.1979.mp41004003.x
Search via ReFindit
Dunning, J. H. (2001, March). The Eclectic (OLI) Paradigm of International Production: Past, Present and Future. International Journal of the Economics of Business, 8(2), 173-190. https://doi.org/10.1080/13571510110051441
Search via ReFindit
Fabus, M. (2011, March). Priame zahranicne investicie a ich vplyv pocas hospodarskej krizy [Direct foreign investment and its impact during the economic crisis]. Economics and Business, 1, 147-154. (in Slovak) http://www.pauenrouni.com/sk/pevs/casopisy/vedecky-casopis-fep/
Search via ReFindit
Fabus, M. (2012, March). Vyuzitie korelacnej analyzy pri skumaniza vislosti prilevu PZI a hospodarskeho rastu na urovniregionov Slovenska [Use of correlation analysis in the determination of FDI inflow and economic growth in the Slovak Republic]. Economics and Business, 2, 23-30. ... (in Slovak) http://www.pauenrouni.com/sk/pevs/casopisy/
Search via ReFindit
Fabus, M. (2014, November). Foreign direct investment and its impact on the Slovak Republic´s economy. Economic Annals-XXI, 9-10(1), 42-45. http://soskin.info/userfiles/file/2014/9-10_2014/1/Fabus.pdf
Search via ReFindit
Fabus, M., & Prno, I. (2014). Investicie a inovacie v podnikani. [Investment and innovation in business Vysoka skola ekonomie a manazmentu verejnej spravy] (in Slovak). Ferencikova, S., & Dudas, T. (2005, April). Vplyv prilevu priamych zahranicnych investícii na hospodarsky rast v novych clenskych statoch Europskej unie zo strednej a vychodnej Europy [Impact of the attribution of foreign direct investment on economic growth in the new member states of the European Union from Central and Eastern Europe]. Journal of Economics, 53(3), 261-272. (in Slovak) http://www.sav.sk/index.php?lang=sk&charset=&doc=journal-list&part=list_articles&journal_issue_no=1175
Search via ReFindit
Gozora, V. et al. (2013). Regionalne disparity v malom a strednom podnikani. Riesenie regionalnych disparit [Regional disparities in small and medium-sized enterprises. Renewal of regional disparities]. Bratislava: Vydavatelstvo Merkury (in Slovak).
Search via ReFindit
Hindls, R. et al. (2007). Statistics for Economists. Praha: Professional Publishing (in Czech).
Search via ReFindit
Korauš, A.; Mazák, M.; Dobrovič, J. 2018. Quantitative analysis of the competitiveness of Benelux countries.Entrepreneurship and Sustainability Issues,5(4),1069-1083. https://doi.org/10.9770/jesi.2018.5.4(26)
Search via ReFindit
Korcsmáros, E., & Šimova, M. (2018). Factors affecting the business environment of SMEs in Nitra region in Slovakia. Oeconomia Copernicana, 9(2), 309-331. https://doi.org/10.24136/oc.2018.016
Search via ReFindit
Ministry of Economics of the Slovak Republic (Official website). Statistical Data. www.economy.gov.sk(in Slovak)
Search via ReFindit
Ministry of Finance of the Slovak Republic (Official website). Statistical Data. www.finance.gov.sk(in Slovak)
Search via ReFindit
Nazarczuk, J., & Krajewska, A. (2018). Local determinants of foreign direct investment in Poland: the role of relative distance. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1), 73-88. https://doi.org/10.24136/eq.2018.004
Search via ReFindit
Pietrucha, J., Żelazny, R., Kozłowska, M., & Sojka, O. (2018). Import and FDI as channels of international TFP spillovers. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1), 55-72. https://doi.org/10.24136/eq.2018.003
Search via ReFindit
Statistical Office of Slovak Republic (Official website). Statistical Data. http://portal.statistics.sk
Search via ReFindit
Tancosova, J. (2013, September). Foreign direct investments and their influence on the economic development of Slovakia. Economic Annals-XXI, 3-4(1), 31-34. http://soskin.info/ea/2013/3-4/zmist.html
Search via ReFindit
Tancosova, J. (2014, March). Investment attractiveness of Slovak republic and its determinants. Economic Annals-XXI, 3-4(1), 8-11. http://soskin.info/userfiles/file/2014/3-4_2014/1/Tancosova.pdf
Search via ReFindit
Tancosova, J., & Cornejova Aradyova, A. (2007, September). Kvalita podnikatelskeho prostredia ako determinant investicnej atraktivnosti ekonomik na prikladestatov[Quality of the business environment as a determinant of the investment attractiveness of the economies on the examples]V4. Economy and Management, III(3), 59-70. (in Slovak) https://www.vsemvs.sk/en-us/vedaav%C3%BDskum/vedeck%C3%BD%C4%8Dasopis/2007.aspx
Search via ReFindit
Tancosova, J., & Svecova, S. (2012, March). Investment attractiveness in theSR and the effect on foreign investors. Elektronicky zbornik vedeckych stati a posterov(pp. 1484-1488). Gyongyos: Karoly Robert Foiskola (in Slovak).
Search via ReFindit
Tvaronavičienė, M. (2018). Toward efficient policy making: forecasts of vulnerability to external global threats,Journal of Security and Sustainability Issues,7(3),591-600. https://doi.org/10.9770/jssi.2018.7.3(18)
Search via ReFindit
UNCTAD (Official website). Statistical Data. http://www.unctad.org
Search via ReFindit