Capital mobility in transition countries of Central Europe: Macroeconomic performance factors and structural policies

In the course of transition, the former centrally planned economies of cent ral Europe have attracted increasing shares of the international capital fl ows to emerging market economies. Moreover, compared to other world regions , a relatively large share of these flows has been constituted of foreign d irect investment. An exploration of the determinants of these capital flows , using a neoclassical model, provided only medium-low levels of explanatio n, and the importance of considering institutional frameworks. The remainde r of the paper examines the influence of financial sector development and o f privatisation on foreign direct investment, portfolio investment, and "ot her" forms of investment.