Foreign Direct Investment and growth in Central, Eastern and Southern Europe

The argument that Foreign Direct Investment (FDI) plays a significant role in promoting growth has provided support for the policy stance emerged since the end of the 80s, when the majority of developing and transition countries started to introduce measures to liberalise trade and to create a favourable climate for FDI , adopting in many cases frameworks designed to attract foreign investors. FDI, in fact, is sonsidered an important source of growth and financing for developing and transition economies as it supplements inadequate domestic resources to finance both ownership change and capital formation and helps to replace large amounts of obsolete capital accumulated during years of central planning. Moreover FDI, as stable long-term capital inflow, is also perceived as a catalyst of growth since it could bring technology, managerial know-how and skills necessary for restructuring firms and help local enterprises to expand into foreign markets.