When Does FDI Reduce Emigration from Central and Eastern European Countries?

This paper investigates the relationship between emigration flows and foreign direct investments (FDI) in Central and Eastern European countries (CEEC). This link is addressed through the following questions: are outgoing labour force and incoming foreign direct investments in those countries complements or substitutes and how does the human capital situation in the country change the effect FDI has on emigration? For the empirical analysis, data from eight CEE countries for the period of 1998-2010 was employed. The estimation results revealed that FDI and the level of educational attainment in the country work as push factors of emigration; however, when interacting, they discourage people from leaving. This suggests that only simultaneous programs should be implemented in the improvement of the educational quality and in the attraction of foreign investors in order to reduce excessive emigration from CEECs.