Capital Mobility in Transition Countries of Central Europe: Macroeconomic Performance Factors and Stuctural Policies. NCRE Online Paper No. 00/01

In the course of transition, the former centrally planned economies of central Europe have attracted increasing shares of the international capital flows to emerging market economies. Moreover, compared to other world regions, a relatively large share of these flows has been constituted of foreign direct investment. An exploration of the determinants of these capital flows, using a neo-classical model, provided only medium-low levels of explanation, and the importance of considering institutional frameworks. The remainder of the paper examines the influence of financial sector development and of privatisation on foreign direct investment, portfolio investment, and ‘other’ forms of investment