C/B/121. Foreign direct Investment in Eastern European Countries

The present paper discusses the key factors that attract foreign companies to enter East European countries. The current statistics shows that the major FDI flows are accounted for Hungary, Czech and Poland, whereas the statistics of Russian and Ukraine share of overall inflow of FDI does not show very impressive figures. Relying on various theoretical frameworks of FDI determinants the paper evaluates the most important factors which have determined the success of one country and have become potential impediments for inbound FDI in the other. The paper seeks to develop "contingent" framework, implying for using different theories rather focusing on a single one. This approach is based on the assumption that macroeconomic, political, legal, social and technological processes of these countries were of heterogeneous nature and resulted in different outcomes. The magnitude of various factors involved in the establishment of the investment climate creates a complex phenomenon, which can hardly be covered by a single theory. That is why the writer is going to apply both PEST and Porters' diamond model in combination with various theories in attempt to identify the determinants of inbound FDI trends in these countries.