Assessment of the risk of foreign divestment in Poland during the COVID-19 pandemic

The importance of foreign direct investment (FDI) to the economic development of Poland cannot be overestimated, both at the regional level and in relation to the economy as a whole. Since FDIs are powered by capital sensitive to various national and international crises, it seems natural to ask whether the situation connected with the global COVID-19 pandemic is reflected in the reduction of FDI inflows to Poland. The aim of the paper is to identify the determinants of the foreign divestment process in the Polish economy as a whole and in its main sectors during the COVID-19 pandemic. The article analyses scenarios of foreign divestment in Poland in an annual perspective, starting from the outbreak of the epidemic in March 2020 up to February 2021. The study used data from a survey conducted in April and May 2020 among nearly 500 enterprises realising FDI in Poland. The benchmark for the surveyed companies was the level of their involvement in FDIs covering a one-year period prior to the announcement of the epidemic. The application of logit models allowed the identification of the most important factors of foreign divestment during COVID-19, including the location of FDIs in the services sector, industry, the IT sector, increased market openness and interactions of variables taking into account the restrictions introduced to the economy due to the pandemic. The level of risk of divestment of these variables depends, however, on the volume of FDI reductions declared by investors and on the sector of the economy. If considerable divestment is assumed, FDIs in the services sector are then burdened with a higher risk of divestment than FDIs in the processing industry. Assuming small divestments, FDIs in the IT sector constitute a factor bearing the greatest risk of FDI reduction in the entire economy.

What Has Happened with C-B M&A Acceptance? A Follow Up Based on 2005 – 2015 Study

Especially since 1990s when capital flows liberalization took their intensive course, also the literature on foreign direct investment and respectfully cross-border mergers and acquisitions grew. On the other hand, although it was accompanying these processes, foreign divestment attracted much less attention. Speculating about the reasons for such situation, one could stress that following the nature of the balance of payments logic foreign direct divestment was not expected. Nevertheless, these processes were present. This chapter addresses some of the most important impacts of foreign direct investment that had been a subject to inverse processes later. The authors try to confront the drivers of these processes and search for different patterns obviously often deriving outside economic rationale from the position of a developed market economy. Using their expertize the authors connected concrete findings of their study with possible drivers of divestment. According to the finding the common nominator was mixed success with the transition in transition countries.