International Conference on Economics, Finance & Business, Rome

COMPETITIVENESS IN ATTRACTING FOREIGN DIRECT INVESTMENT GENERATED BY DEVELOPMENT OF AI IN WARSAW, BUCHAREST AND BUDAPEST

BOGDAN POPOVICI

Abstract:

Abstract This paper studies the competitiveness in Central Eastern Europe between Warsaw, Bucharest and Budapest for attracting foreign direct investment (FDI) using the development of the artificial intelligence and its remodeling role of business relationships, communities and states infrastructure. Faster digital transformation and stronger urban branding influence more and more the final investment location. The connections between the cities policy frameworks for AI, the quality of human capital, the digital infrastructure and the speed of implementation of European Union programs for digitalization and AI rises the attraction for FDI. Data between 2015-2024 about broadband development in every city analyzed, funds for R&D, digitalization and AI number of startups, AI readiness expressed in digital skills prove the modernization of the economies of every city and trends of business activity deeper and deeper connected with AI. Bucharest low cost but skilled workforce, Budapest AI Coalition initiatives and Warsaw premium position as emerging AI hub are empirically proved as results of different levels of implementation of AI policies which generate different levels of attraction of FDI’s. This study brings new perspective to the scientific literature, which is not yet very organized and clear because of very new economic developments, on AI which influences the economies of the three cities and whole Central Eastern Europe and brings bigger FDI in resonance with branding and smart policies in the field. Recommendations based on evidence and math models are made to rise the economic development of the three capitals, to minimize the disparities between them and to obtain higher level of competitiveness with the rest of European Union and stronger flows of FDI’s with the help of innovative AI implementation.

Keywords: Artificial Intelligence, Foreign Direct Investment, Digital Ecosystems, Central and Eastern Europe, Urban Competitiveness