Is cluster development an explanatory factor of increased levels of FDI? Evidence from the case of Bulgaria

This paper explains determinants of FDI levels in Bulgaria by comparing cluster theory and traditional theories of international production. The results obtained may add another perspective on future development of entrepreneurship in Bulgaria and other transition economies. The research stresses out that clusters, especially when backed up by government or local assistance, can contribute to inter-firm cooperation and networking, which eventually represents a necessary determinant of regional development.