The impact of uncertainty on foreign direct investment inflows in the Central and Eastern Europe region

The paper's findings confirm that, alongside macroeconomic fundamentals, uncertainty represents an important determinant of international investment flows. This paper examines the impact of global uncertainty on FDI flows in Central and Eastern European countries during the observed period Q1 2015 - Q1 2025. As a measure of uncertainty, we used the World Uncertainty Index (WUI), constructed by the research unit of the renowned British magazine The Economist. The WUI enables comparable and frequent monitoring of uncertainty at both the global and country levels. Empirical analysis, conducted using a dynamic panel model with fixed effects, shows that an increase in the WUI significantly reduces FDI inflows in a group of 11 countries in the region. This effect is even more intense in a subgroup of four countries that, in addition to global shocks, were simultaneously exposed to specific internal socio-political crises over the past one to two years.