Research

The main aim of the paper is to assess the existence and the influence of competition of jurisdictions (considers institutions and tax policy) for the FDI inflow in CEE countries and their differences with EU countries. The methodology used in the study is spatial panel Durbin error model. The main results indicate a positive and significant relationship between rule of law and political stability and foreign investment, and a negative and significant relationship between quality of corporate governance and tax policy and foreign investment in developing CEE countries. The outcomes of the spatial model suggest the presence of competition effects of tax policies on FDI and reinforcement effects of quality of corporate governance on FDI in developing CEE countries.