Impact of COVID-19 on foreign direct investment in the European Union

Authors

DOI:

https://doi.org/10.32015/JIBM.2025.17.2.3

Keywords:

foreign direct investment, European Union, COVID-19, macroeconomic factors, policy response, sectoral shifts

Abstract

Background: The COVID-19 outbreak affected foreign investment worldwide, and the European Union (EU) suffered a more pronounced drop in foreign direct investment (FDI) compared to other world areas. Objectives: This paper examines the pandemic's impact on FDI in EU Member States, considering the influence of macroeconomic variables and policy responses on FDI behavior. Methods/Approach: Based on quarterly data (2020Q1–2023Q4) retrieved from Eurostat, OECD, and UNCTAD, the research employs descriptive statistics, as well as the panel regressive approach to examine FDI tendencies, the change in the composition of flows, and the role of macroeconomic and institutional factors. Results: The results indicate that the worse the severity of  COVID-19 is, the less FDI performance will be, especially in manufacturing and tourism. However, investment in digital and green sectors held up. Recovery mechanisms at the EU level and national screening regimes affected the dynamics of investment, indicating that there will be structural changes in location and internalization advantages in the post-pandemic period.

Author Biographies

  • Vito Bobek, University of Ljubljana, Faculty of Social Sciences

    Vito Bobek works as a professor of international management at the University of Ljubljana (Slovenia), the University of Applied Sciences, FH Joanneum (Graz, Austria), and the University of Maribor (Slovenia). He published over 400 units in his academic career and visited 22 universities worldwide as a visiting professor. He is a member of the editorial boards of six international journals, an open-access publisher of Intech in London, and is appointed as the Senior Reviewer for Springer Books. In his consulting firm Palemid he has managed 20 significant projects. He has also participated in many international projects in Italy, Germany, Great Britain, the USA, Spain, Turkey, France, Romania, Croatia, Montenegro, Malaysia, and China. Among his previous functions, he was a member of the Supervisory Board of KBM Infond Management Company Ltd, which belongs to Nova KBM, Plc. Banking group; a member of the Team Europe Slovenia and advisor to the Ministry of Economic Relations Development of Slovenia for the strategy of International Economic Relations.

  • Tatjana Horvat, University of Primorska, Faculty of Management

    Tatjana Horvat is the dean of the Faculty of Management at the University of Primorska and a full professor of accountant and auditing. She is a Certified State Internal Auditor (licensed by the Ministry of Finance RS), Certified Internal Auditor for the Business Sector, and Certified Accountant (licensed by the Slovenian Institute of Auditors). At the Ministry of Justice of Slovenia, she is a member of examination boards for court expert candidates and judicial appraisers in the following areas: economy/ finance, valuation of companies, banking, and forensic investigation of economic operations/ accounting. At the leading business newspaper Finance in Slovenia (Swedish ownership), she is the editor and head of business, finance, tax-related articles, and educational programs. She has written over 300 papers, essays, books, and manuals and attended many international scientific and business conferences and universities.

References

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Published

2025-11-28

Issue

Vol. 17 No. 2 (2025)

Section

Original article

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Copyright (c) 2025 Vito Bobek, Romana Korenič, Tatjana Horvat

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How to Cite

Bobek, V., Korenič, R. ., & Horvat, T. . (2025). Impact of COVID-19 on foreign direct investment in the European Union. Mednarodno Inovativno Poslovanje = Journal of Innovative Business and Management, 17(2). https://doi.org/10.32015/JIBM.2025.17.2.3

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