Abstract:
Foreign direct investment (FDI) has been the main driver of restructuring and modernisation in Central and Eastern Europe. This paper looks into FDI stocks and flows in a dynamic and cross-country perspective, comparing the key EAEU countries (Belarus, Kazakhstan and Russia) as well as DCFTA countries (Georgia, Moldova and Ukraine) with selected EU-CEE peers (Hungary, Poland, Romania and Slovakia) in the neighbourhood. The study shows that EAEU and DCFTA countries have not been particularly attractive for foreign investors taking out round tripping inflows from offshore destinations, the accumulated FDI would be even lower. This explains a lot why restructuring in the region stalls. This pattern can change only with marked improvements in the domestic regulatory environment and investment climate.