The outward foreign Direct Investment from the Baltic States

The article examines the role of foreign direct investment (FDI) in a transition economy. The analysis of structure and dynamics of FDI into Estonia and outflow of FDI from the country demonstrates the important role of the FDI in capital formation of companies. The reason of Estonian firms being important foreign investors in Latvia and Lithuania is mostly geographical closeness of Estonia to Finnish and Swedish capital. The final goal of Finnish and Swedish firms is not to operate only in Estonia, but to move forward to the other Baltic States. A case study of an Estonian enterprise from the food manufacturing industry is presented. The main problems for successful investment abroad have been the difference in business culture and the long distance for operative management of the company.