FDI Contribution to Transition Development: Slovakia versus Slovenia

In general, scholars consider Foreign Direct Investment (FDI) as an important factor of development in transition economies, which are changing from former socialist economic forms to more recent capitalist ones. A typical, and very much quoted example, to that regard, is nowadays China. The opinion goes that FDI brings two badly needed elements to the input economic environment: capital and know-how. From the opposite point of view, also capital and knowledge are looking for such environments, because they find there cheap production factors to be mobilized, in order to get higher investment yields. But is such a simple equation entirely true? Examples can be found of countries, which were able to develop with less FDI, and predominantly by domestic efforts, for instance, Japan. The paper tries to find answers to this question not only theoretically, but also by taking into consideration examples from the field. Two transition economies Slovakia and Slovenia, also with similar names, have been taken into consideration and studied, which permitted to draw some interesting answers to the question formulated initially.