Foreign Direct Investment
|
 |
|
IES: What is the focus of your most current research?
Sohinger: During the past two decades foreign direct investment (FDI) has become an integral and growing part of the world economy. FDI has also asserted itself as being at least as important as trade in reallocating global resources. Moreover, it has become the official policy of many developing countries to attract foreign capital, hoping such investment will complement low domestic savings, bring in state-of-the-art technologies, and generate enough positive spillover effects to stimulate their growth and development. However, there has been mixed evidence in the FDI literature on how much and in what ways it affects the host country's growth and development prospects. My research interest is to compare the experiences of transition economies in Central and Eastern Europe with Asian countries and Latin America, and to focus on the interplay between the development strategy and long term FDI effects on the host country's economic performance and competitiveness level. In addition to my research on foreign direct investment, I taught Microeconomics at the UC Berkeley Exension in the Fall 2003 and will teach it again in the Spring semester of 2004.
IES: What in your past academic and life history influenced your current research choices?
Sohinger: During the past several years I was the coordinator of a research project sponsored by the Ministry of Science and Technology of the Republic of Croatia in which we produced two computable general equilibrium models of the Croatian economy. One was a single country model, the first one ever made for the Croatian economy, created with Professor Irma Adelman of UC Berkeley. The other one was a GTAP based multi-country model on which I cooperated with Glenn Harrison of the University of Central Florida, and Davor Galinec of the Croatian National Bank. The simulations we ran were focused on the effects of trade liberalization. We had three scenarios of Croatia progressively joining the World Trade Organization, the Central European Free Trade Association, and the European Union. To take this analysis further, it seemed natural to me that foreign direct investment and its effects on the Croatian economy should be included as well. This is the theme of my current project with the Ministry of Science and Technology in Zagreb. However, in order to have a multi-dimensional picture, I feel it is necessary to approach this topic from a comparative perspective. So I take great pleasure in learning about the Asian and Latin American experiences, their development strategies, and FDI effects.
IES: Being from Croatia, what are your views on the future of the Balkans and their relationship with Europe?
Sohinger: Geographically speaking, what is considered to be the territory of the Balkans is debatable. The word "Balkans" has no political meaning: when used as an adjective, it only adds pejorative meaning to the subject. Your question was probably aimed at addressing the issue of the former Yugoslavia.
IES: Do you see the potential for another war in the former Yugoslavia?
Sohinger: The four-year-long war on the territories of the countries that make up the former Yugoslavia ended after the brilliant negotiating efforts of Richard Holbrooke culminated in the signing of the Dayton Peace Accord. However imperfect, it set ground for much needed peace and the beginning of the process of recovery and reconstruction. The American presence in the region, which was indispensable, ensured the other most important thing: that the Agreement is not ignored as were all the previous ones. Consolidating both the economic and political situations in each of the succesor countries, setting the human rights records straight, ensuring democracy, and fulfilling other requirements set by Europe with the aim of eventually incorporating all of them in an even more expanded European Union, is the long lasting force that can preserve peace in the area.
IES: Do you see Croatia in the EU soon?
Sohinger: In 2003 Croatia submitted a formal application for membership in the EU and so began the process of adjustment and harmonization with the many EU laws and regulations. This process is happening on all levels and it is a direct impulse towards change. Positive effects of this process have been felt in many areas. For instance, as a result of opening up the banking system to foreign banks (some major Austrian and Italian banks opened their subsidiaries in Croatia), the transaction costs went down both for doing business and also in private transactions. Loans became more accessible to the companies and to the public at more favorable interest rates than before. Also, the infrastructure has and is continuing to be upgraded with new freeways connecting Zagreb with the Adriatic coast. The recent trade liberalization, which started with the Croatian entry into the WTO, has created pressure for the domestic producers to improve their competitiveness and the consumers can now choose between a great variety of imported goods and the domestic ones whose quality is improving as a result of that pressure. Such processes don't come without social costs, however. There are imbalances caused by the adjustments, but the direction is positive and the interest to join the European Union is there. It is expected that Croatia will be a part of the next wave of enlargement in 2007.
IES: Which faculty do you work with on the UC Berkeley campus?
Sohinger: My host professor is Professor Barry Eichengreen, whose work I find greatly inspiring. I also enjoy sharing insights with Professor Irma Adelman whose knowledge and experience in the development area I find invaluable.
IES: What is your current connection to IES? How much does your current research lend itself to that connection? How has it helped you thus far, and how will it help you in the future?
Sohinger: IES provides an intellectually stimulating environment and it is staffed with very pleasant people. Being a visting scholar at IES enables me to attend its excellent seminars. I also plan to give a talk on my research here in a couple of weeks. What I find most attractive in the work generated within the IES is its multidisciplinarity. Seeing things from the historical perspective, as well as from the political science point(s) of view and, naturally, with an economics dimension attached to it, produces interesting scholarly work and up-to-date political analyses and commentaries.
IES: Where is European Studies going? What is important to you about this subject?
Sohinger: Everything I said about the IES can be applied to the European Studies program. In my opinion, the multidisciplinarity is its most important overall characteristic. European integration is one of the major global phenomena and there definitely exists the need for comprehensive evaluation of all its main aspects: historical, political and economic. Also, including different European cultural studies and language programs transcends the usual approaches and creates special awareness of the richness underlying the European processess.