CASE Policy Briefs, CIS, Eastern Europe, Caucasus and Central Asia, FDI, Post-communist transition and development issues, Trade, economic integration and globalization

How to improve the investment climate in the CIS?

Private capital flows and foreign direct investment (FDI) to developing and transition economies has soared throughout most of this decade. In 2008 net private sector capital flows reached an estimated $619 billion (from a record $900 billion in 2007) while FDI accounted for an estimated $580 billion. Some of this capital has headed to the Commonwealth of Independent States (CIS), a region whose prospects have improved considerably since the 1998 Russian financial crisis. Although the amount of capital flows into the CIS has been largely insignificant prior to and shortly after the crisis, currently their share of global private capital flows has averaged a more impressive 13%. Attracted by the region’s decade long growth, international investors began investing in the CIS to exploit potentially lucrative investment opportunities.