Multinationals from Post-socialist Countries: How Large Their Foreign Investments Can Be?

Abstract

Increased outward foreign direct investment from post-socialist countries indicated the emergence of indigenous multinational companies. Nevertheless, we do not have a clear picture about the real extent of outward FDI realised by indigenous firms, as balance of payments contain data on outward FDI realised by resident firms, including transactions both by locally controlled and foreign-controlled firms. The chapter tries to have a closer look at the possible respective shares of these two groups of companies, relying on the comparison of outward FDI data published by the respective national bank and inward FDI data of the partner country according to the ultimate controlling owner of the investment. We found that the stock of outward FDI controlled by Czech firms ultimately may be substantially larger than what is presented as outward FDI data. Many Czech foreign investor firms realise FDI transactions from foreign headquarters. Similar can be the case for Slovakia. On the other hand, Estonia, Hungary, Poland and Slovenia act as intermediary countries for FDI, which means that outward FDI realised by local subsidiaries of foreign multinationals may represent a substantial share of total outward FDI. Thus FDI by indigenous multinationals represents a smaller share of total outward FDI.