LAW AND THE REGULATION OF FOREIGN DIRECT-INVESTMENT - THE EXPERIENCE FROM CENTRAL AND EASTERN-EUROPE

Foreign direct investment can play a key role in stimulating the economies of developing states. The effect of the domestic legal regime on foreign direct investment is often neglected. Using the states of Central and Eastern Europe as examples, this Article analyzes the ways in which domestic legal regimes have affected foreign direct investment. The authors argue that legal rules influence investment by affecting factor prices, transaction costs, and the allocation of risk in developing economies.