FOREIGN DIRECT-INVESTMENT AND JOINT VENTURES IN EAST-CENTRAL-EUROPE - A GEOGRAPHICAL PERSPECTIVE

Capital flows in the form of foreign direct investment (FDI) are becoming one of the major mechanisms of interaction between Western and East-Central Europe. The major objective in this paper is to assess the extent and distribution of FDI between Czechoslovakia (before its breakup), Hungary, and Poland at the beginning of 1992. A detailed examination of the new investment patterns is followed by an analysis of the capital flows by geographical origin of investors and sector of the economy. In addition, the political and economic reasons for emerging regional differences in terms of FDI are discussed. The conclusions are focused on possible scenarios for future FDI in the region and its importance in the European integration process. It is clear that the benefits of direct Western investment in the former Eastern Europe stretch well beyond narrowly defined economic interests.