Structural Policy Reform and the Distribution of FDI in Europe

The envisaged EU enlargement will lead to a redirection of Structural and Cohesion Funds expenditures from current to new EUmembers. This redistribution of funds makes the accession countries even more attractive as a location of FDI. Using a logistic regressions approach, this paper shows that a hypothetical reallocation of Structural Funds as envisaged by Agenda 2000 leads to a redistribution of FDI by approximately 0.8 percentage points from the current EU members to the accession countries (first round) and 2.6 percentage points (second round), respectively