Abstract
The Central and Eastern European (CEE) region underwent a series of substantial political and economic transformations in the 1990s and 2000s, from the transition to democratic rule to the establishment of a free market economy. While foreign investors recognized the region’s market potential, opportunities for corruption also arose in the post-communist era. Corruption became an issue of particular concern as many of the countries in the region applied to join the European Union (EU). By the late 1990s and throughout the 2000s, however, the countries in the CEE region had also experienced unprecedented inflows of foreign direct investment (FDI) and economic growth. This study examines the impact of corruption and EU membership on inward FDI in ten cases in the CEE region, and Romania more specifically, from 1998 to 2008. A mixed methods research design provides supporting quantitative and qualitative evidence for the hypotheses that corruption is not a significant determinant of inward FDI and that the reputational effects of EU membership contribute to investor confidence. The scope of this study is timely and relevant for academics and policy makers as the CEE states continue to fight corruption, while the findings contribute a framework for the analysis of significant determinants of FDI in periods of transition.