engleski

The Impact of the FDI on Development of the ICT Sector in the South East European Countries

After the fall of Berlin wall and Balkan crises, ex central planned economies underwent the transition process. In economic literature they have been put into two groups, Central European countries and South East European countries. The later are generally less developed, receive less FDI, have weak relationship with the EU and are more lagging in the speed of transition than the former. During 1990s South East European countries received between 7 and 20% of total FDI inflows attracted by the CEEC-8, economies which joined the EU in 2004. These inflows to the South Europe were concentrated in three countries: Croatia, Romania and Bulgaria while Albania, Bosnia and Herzegovina, Macedonia, and Serbia and Montenegro have received negligible share of the FDI in the region. According to economic theory, FDI inflows are principally driven by difference in price of factors of production and size of national market or it is known as resource-seeking and market-seeking FDI. Foreign investors move their production process to the developing countries aiming to use advantages of cheaper factors of production and their strategy is de-localization of low-skilled production stages towards low-wage countries which is in economic literature known as vertical investments. In the context of the SEEC-7, research confirm the global trends - an explosion of FDI in the service sector as a result of the general trend towards the liberalization of FDI framework for services. Amongst services, the highest amount of FDI inflows was attracted by financial services, transport which covers telecommunications and trade. FDI is considered responsible for welfare incremental in the host country due to advantages related to the introduction of new technologies and innovation, new managerial techniques, development of additional skills, increased capital, creation new workplaces and improvement of working conditions, and the development of industrial sector in the host country or we can conclude better competition of national economy. Looking at a world’ s scene, during the last decade of 20th century, some major structural changes in economic system have occurred behind which lay processes of globalization and internationalization and these changes have brought incremental in competition. The most important impact on these changes has had a technological innovation and development, in which is the noticeable role of information and communication technologies (ICTs). The New Economy broadly stressed the meaningless of information and communication technologies in business processes but the advent of ICT has shifted demand for labor toward workers with skills complementing the new technologies. ICT has changed the structure of supply and demand for labor due to higher growth rate of employment and earnings in ICT producing industries than other sectors. Previous research has found that computer use is positively associated with hourly earnings. The new technologies, together with some other changes in societies, increase employment of women and service sectors. Besides fact that the one of the most attractive sector for foreign investors in SEEC-7 was telecommunication and very high registered unemployment rate in this paper we will research the impact of FDI on development of ICT sector and its transformation of the labor market. Statistic data from this part of Europe is very weak and in some parts is not reliable, especially when we talk about unemployment because of existence of a large informal sector. Due to missing the statistical data, we concentrate our research to Croatia. In this paper, we try to prove that the FDI inflows to the telecommunication sector in SEEC-7 improves the infrastructure looking through ICT sector but also are responsible for higher unemployment rate in the first phase of transition.

FDI; ICT; SEEC-7; labour market

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