Abstract. Starting from 1918, multiethnic Transcarpathia changed after centuries of being an integrated part of Hungary frequently its political affiliation and is since 2004 a Ukrainian border region to the European Union. Three of the four European Union neighbour countries belong since 21.12.2007 to the Schengen zone (Poland, Slovakia, Hungary), only the southern neighbour Romania is for the time being not yet a Schengen country. After a phase of relatively open borders and relatively intensive neighbourhood relations in the first transformation years, by the Schengen regime the situation for Transcarpathia changed again. The current situation, possibly still to be intensified by the Schengen entry of Romania, is likely to persist for some time. What does this mean for Transcarpathia as well as for the wider region in the northeast of the Pannonian basin? Which factors are determining the development in Transcarpathia? Which position maintains Transcarpathia within the Ukraine, how does it look at Kiev and how is it looked at by Kiev and the cis-Carpathian areas of the Ukraine? The paper deals under these aspects with economic development in Transcarpathia, the interest of foreign investors in the region, its role in the continental transportation network, the identity of the Slavonic population majority and regionalism, also with the position of the large Hungarian minority in the region and its relation to the motherland. The paper is based on a larger research project completed and published already in 2004 (Peter Jordan, Mladen Klemenčić: Transcarpathia – Bridgehead or Periphery?), but adopts also the results of a later diploma work of a student of the author (Berenike Ecker) as well as results of more recent research by the author himself. It is found that shaping by Hungarian history, borderland location and multiethnic structure can be defined as the essential components of Transcarpathian identity. Its economic potentials and perspectives rest mainly in richness in wood, its pleasant landscape and mineral waters, its location in the European traffic network, its border location and bridge function, the rich language skills of its population, the region's Central European character. By post-Communist industrialisation (wood processing, food industry, electrotechnical industry) and due to intense transborder relations of the Hungarian minority the region was able to make some progress during the transformation period, but could not yet escape its economically peripheric position. Major obstacles for a better development can be identified in an all but market-conform agriculture, in the Schengen regime cutting Transcarpathia off especially from Slovakia and Hungary as well as in Ukrainian regional governance structures enforcing centralist attitudes at the two levels of regional administration.