Foreign direct investment (FDI) and foreign portfolio investment (FPI) have been long considered as independent forms of international capital flows. This paper analyzes the mutual relationship between FDI and FPI and attempts to answer the question whether they complement or substitute for each other from a foreign investor’s point of view. The paper describes the main characteristics of FDI and FPI in terms of their volatility and profitability. We analyze the long-run and short-run relationships between FDI and FPI using vector error correction (VEC) regressions on data for Poland as it is the largest country in Central and Eastern Europe and receives the lion’s share of these two forms of capital in the region. Our investigation suggests that FDI and FPI may be regarded as substitutes. In economically stable periods FDI tends to dominate over FPI but during insecurity and economic distress FPI starts to gain importance.

In this study, effects of political stability, economic freedom and trade freedom of above-stated Fragile Five Countries consisting of Brazil, Indonesia,India, Turkey, and South Africa on the performance of FDI appeal was analyzed with first generation panel data analysis method for the 1996-2017 period. The cointegration analysis between series was conducted by means of Kao (1999) and Pedroni (2004) test. The analyses showed that political stability and trade freedom have a significant positive coefficient on the Fragile Five Countries’FDI. It was also determined that the impact of economic freedom on FDI was statistically insignificant. Thus, it was concluded that the most important determinant of FDI entry into countries is political stability. Error correction mechanisms of models have been working well. In addition, it was found that political stability, economic freedom, and trade freedom are the cause of foreign direct investment in the long-run.

On 19 March 2019 the European Union (EU) adopted the Regulation establishing a framework for the screening of foreign direct investments into the EU (the “Regulation”). Four years later, the geopolitical situation changed completely as a result of the Russian aggression against Ukraine. Since February 2022 the EU has successively expanded its sanctions imposed against Russia. In parallel – on 6 April 2022 – the European Commission published the Guidance to the Member States concerning foreign direct investment from Russia and Belarus in view of the military aggression against Ukraine and the restrictive measures laid down in recent Council Regulations on sanctions.
The aim of the article is to draw attention to selected aspects of the Regulation which may be relevant in face of the threats to the European and national security and public order posed by the actions of the regimes of Russia and Belarus, following the invasion of Ukraine. In the perspective of the ongoing war in Ukraine, the issues discussed in this article may be points that are worth considering when amending the Regulation in view of the announced revision of the Regulation in Autumn 2023.