Inward and Outward Foreign Direct Investment in the Baltic Sea Region

Abstract

This article reviews the main characteristics of both inward and outward foreign direct investment (FDI) in the Baltic Sea region. Among other questions, it explores the extent to which intra-regional flows have gained in importance over recent years. It highlights that both inflows and outflows have failed to recover quickly after the Great Recession of 2007–2009, due to problems in the Eurozone and the crisis of the Russian economy. Nevertheless, the Baltic Sea region remains a group that relies much on inward and outward FDI in economic development. It is also shown that for some of the economies, intra-grouping investment ties are important. These ties are particularly close between some neighbours and with large economies, especially Germany and Sweden.

Keywords: Investment, FDI, Baltic Sea region

JEL Classification: F21, F23, F42