Transformations  in
Business & Economics

The Impact of FDI on Host Country Subsidiaries: Three Case-Stories from Estonia
Tiia Vissak

ABSTRACT. The paper aims to investigate the impacts of foreign direct investment (FDI) inflows on Estonian firms. After reviewing the literature on positive and negative impacts of FDI on subsidiaries and their host countries and on the factors leading to different impacts of FDI, it presents three case-stories: Silvano Fashion Group, Estmilk Production and the impacts of Tolaram Group from Singapore on its four firms – Baltex 2000, Horizon Pulp and Paper, Qualitex and Baltex Nonwovens – in Estonia. Thereafter, managerial implications are provided. The paper concludes that it is hard to foresee all the effects a certain foreign direct investment may cause for a specific enterprise and the host economy, in general. Often, some interest groups may prevalently benefit, while some others may lose and yet for others, the impact may be minimal or the positive and negative impacts may balance one another. Moreover, the impact of FDI may change over time.

KEYWORDS: foreign direct investments, multinational corporations and foreign subsidiaries, transition economies, Estonia.

JEL classification: F21, F23, P27, P2.