Foreign Direct Investment in Transition Economies of Europe and the Former Soviet Union

This chapter looks at key issues concerning inward foreign direct investment (FDI) in transitional countries from Europe and Central Asia. It considers the important determinants and influences for inward FDI in these economies. A number of key determinants of inward FDI such as market size, natural resource endowments, and institutional quality are considered and found to be of importance. It also examines the contribution of inward FDI to the process of economic transition. The contribution of inward FDI to economic growth is examined. Although the connection between economic growth and inward FDI is more complex than might be expected, evidence does indeed suggest a strong association between the two in transitional countries. Finally, structural change is an important part of the process of economic transition, and in this too inward FDI has at least a significant potential contribution to make. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.