Lack of foreign investment is the major problem of further development of the member states of the Central European Initiative. The issue is crucial to most countries, since the current foreign investment at USD 19 milliard which is only 4% of global investment.

Major lack of capital turns out even worse when compared with the flow of foreign investment in its three major recipients - USA, UK and France. OECD statistics suggest that in 1996 foreign investment in the US reached USD 84.5md, the UK 32.8md and France 20.4md.

In 1991 the impact of the disintegration of FSU and the war at the Balkans culminated in Central and East Europe. The foreign investment volume in the limited CEI represented USD 5md. The volume increased four times since, but up to 89% headed in only four countries - Italy, Austria, Czech Republic, Hungary, and Poland. By 1997 less than USD 2md went to the rest.

"Growing investment has been noted between 1991-1993 and 1994-1995. As far as the investment internationalisation is concerned, the CEI lacks behind the global average. The share of internal investment at GDP is above world average only in four member states - Hungary, CR, Albania, and Slovenia. International data suggest that the share in Hungary is exceptionally high reaching 33%. The share in Poland and Austria remains higher than the CEI average, but lower than the global average," says Kalman Kalotay from UNCTAD that produced a report on global investment in 1998.

The analysis by the Hungarian economist presented at the Zagreb Economic Forum suggests that the annual loss of foreign investment from the CEI has exceeded USD 2md. The major share up to 97% is caused by Italy and Austria.

When omitting the above two EU members, the structure of foreign investment input is dominated by production and services. The least investment goes into agriculture and mining industries. Food and automobile industries are the most sought-after within production. The investment in services is balanced between finance, transport, trade, and telecommunications. The share of services on investment in CR, Hungary and Slovenia is higher than the share of production. The leading investors in the CEI are the USA and Germany with 18% on total investment. The US lead in Croatia, Poland and Ukraine. Germany has taken the lead in Bulgaria, CR, Hungary, and Slovakia. They are followed by the Dutch and the Austrians. It is interesting that balanced investment at USD 0.25md comes from Italy to Poland, Slovenia, Hungary, and Romania.

"In 1998 the chances for investment decline were rather narrow. In 1997 the foreign investment input in the CEI, except for Austria and Italy, approached USD 3md. The forecast for 1998 was that the CEI total would attract some USD 13-14md. Although some decline is unpredictable, we anticipate the overall trend to copy the global growth," says K. Kalotay.

Other experts suggest that the growth of investment shouldn't be determined by the economic and financial crisis in Russia. The reason is that, except for Moldova, Ukraine, Belarus, and Bulgaria, the other countries don't concentrate on the Russian market and the Russian import.

The general assumption is that within the next two years the investment will concentrate on Bosnia and Herzegovina, Croatia, Slovenia, and Slovakia.

Global investment review

Major recipients of foreign investment (1992-1997)

Structure of foreign investment

Slovak Trade FORUM