Temporal and Regional Variation in the Developmental Consequences of Foreign Capital Penetration in Transitional Economies Diverging in Trajectories to Capitalism

Did the introduction of FDI as a catalyst for economic development and a strategy for market creation facilitate the market transition and thereby increase the growth potential of the post-communist countries or just decrease their economic prospects of converging with "modern rational capitalism" typically found in North America and Western Europe? What influences whether FDI is beneficial or detrimental to the economic performance of transitional countries which rapidly or gradually introduced market institutions? Focusing on the various role FDI plays in economic transition, this study seeks to understand how foreign direct investment(FDI) affect the economic development in Post-Communist countries diverging in their trajectories to capitalism using coinetgration analysis. The central argument underlying the analysis carried out in this study is that much of the growth effects of foreign capital---both direct and indirect---will depend on the regime type within which it operates; arguably, the effects on economic development can vary a lot.