How FDI influences economy development of Eastern Europe

Abstract

The article analyzes the benefits, risks and effectiveness of the model of modernization through broad-based foreign direct investment in the Eastern Europe countries. We are going to consider a group of post-transition economies which comprises ten postsocialist countries pasted successfully transition period and became EU members in 2004 and 2007. The work analyzed factories, that determine high dynamic growth of FDI inflows in these countries. The purpose of the article is to summarize how FDI influences on structure of economy, its internal and external balance, on the level of technology, efficiency and competitiveness of production. We are going to approach the relation between foreign direct investment (FDI) inflows and innovation activities of Research and Development (R&D), analyzing the empirical data for the East European countries.