Answers to Baltic Foreign Investment


Their own source says that the main barrier to investment is business conditions in the Baltic countries that are driven by the economies of EU countries

Jordge Duran, 2019, FDI & Investment Uncertainty in the Baltics,, t: Jorge Durán, European Commission, Directorate-General for Economic and Financial Affairs,

The reason why FDI remains depressed is very likely linked to the dismal economic performance of the EU as a whole over the period 2010-2016. For small open economies, market conditions in trade partners can have an important impact on local business perspectives…. ….Indeed, there is evidence that in the short term it is business conditions or prospects that are the main determinants of FDI. A glance at the business cycle (Table A.1) shows that both investment and FDI are strongly procyclical but while investment clearly leads the cycle, for FDI it is less clear cut. A contemporaneous or even lagging FDI would indicate that economic activity has to pick up in order to attract foreign investment again.15 …Conclusion The evidence available suggests that uncertainty about business conditions is the main reason why investment in general and FDI in particular remains depressed in the Baltics. The article says the main reason investment is low is because of BUSINESS CONDITIONS related to the strength of the economies in those countries, which is driven by the strength\ of the European Union’s economy

And the foreign investment competes with investment in the EU, internally link turning their own case.

Luz,  xx-xx-2021,  “The Baltic Region Has Emerged,” No Publication,

The Baltics are increasingly competing with established tech innovation hubs like the Nordics, the EU, and Israel and attracting interest from foreign investors.

Their troops link is absurd.  It is from 2007 (F) This is article is written (2007) shortly after a major round of NATO EXPANSION (2004) in which many countries, including the Baltic countries, became NATO members and how that should increase investment but they are already NATO members. It’s also talking about two countries — Iraq and Afghanistan — and what happened after a massive war in each country. It says that after the war and US troops came in the countries had more foreign investment as a result of US troop presence. This is not the situation in the Baltics. (A) Like Iraq, they don’t have trillions of dollars in oil resources (B) They are not recovering from massive wars and need rebuilt.  © They didn’t already have security commitments in the form of an Article V guarantee from NATO  (D) The article also says…

And there isn’t a single reason US firms would start investing in the Baltics when there are a million other places they can already invest in.

The claim they are drawing from the Elkin article is crap.  They just have random words from different parts of the article strung together by ellipses. Here’s the article ( It doesn’t make the claim anywhere.

Investors aren’t going to see the difference. NATO is already committed to defending the Baltics, including through Article V commitments and regular military exercises. If that doesn’t reassure them, some small increase in security will not.

Investors also have fears. Investors hire geopolitical analysts who will tell them that deploying more Western forces, especially US forces, on Russia’s borders will make Russia more insecure.

Investors have other issues. As long as there are more secure places to invest., such as in Canada, China, and the US, they aren’t going to invest in small countries that are still unstable, even with greater commitments.  And if NATO is that important, they’ll invest more in Poland.

Investors mostly concerned about COVID-19

More security is not needed to increase investment and investment there trades-off with investment in Israel

Joe Harper, June 18, 2021,, Baltic states rising as venture capital stars

The Baltic states are competing with established tech innovation hubs like the Nordics and Israel and attracting interest from foreign investors, with venture capital firm Index Ventures ranking the Baltic states as the top three most startup-friendly countries in Europe. ‘I could have done more’: Wałęsa on Ukrain Ukraine’s comedian president gets serious about the country’s oligarchs Imitating Russia, Hungary bans ‘gay’ content – and that includes rainbow flags

Latvia, Estonia and Lithuania led 22 countries including the US, UK, Israel, France and Germany in the ranking. Startup Wise Guys, a European start-up accelerator, reports that the region has produced fivefold more funding per capita than the Central and Eastern European region’s 14 countries. Roberta Rudokienė, head of Startup Lithuania, told local media that the local start-up ecosystem had achieved great momentum in recent years, supported by a progressive central bank and fintech-friendly regulatory landscape. Latvian legislation in December gave tax exemptions to start-ups and reduced the time they need to hold stock options before they can cash them in. While these policy changes will be welcome news to Latvian and Lithuanian start-ups…we now need the rest of Europe and the European Union to follow suit,” Index Ventures partner Martin Mignot said in a statement. Baltic Tech Ventures, the region’s first publicly traded venture capital firm, recently completed a secondary public offering, attracting international investors from the UK, US, Israel, Monaco, Italy, and Switzerland and regional investors from Latvia, Lithuania, and Estonia. Launchpad Capital, a new early-stage venture capital firm led by San Francisco-based fintech investor and entrepreneur Ryan Gilbert, plans to use part of 35 million US dollars to support early stage Lithuanian start-ups targeting North America. Tera Ventures, a veteran seed-stage fund in the Nordics and Baltics, announced in April 2021 it had brought in global limited partners in a 43 million euros fund. Last year saw a record number of investments in Baltic start-ups. It was the first time to date that five of the top 10 deals by value in the region involved investments in or acquisitions of start-ups (Bolt – twice, Coolbet, Drops, Skeleton Technologies). In November 2020, the Estonian start-up Pipedrive received an investment valuing it at 1.5 billion US dollars, making it Estonia’s latest unicorn. In November 2019, Vinted became the first unicorn in Lithuania. Over the past two decades, Estonia, a country of 1.3 million people, has seen the emergence of seven unicorns, this year’s crop being led by Zego, which insures commercial vehicles. The other Baltic states, Lithuania and Latvia, have been doing well too. According to a report from Startup Wise Guys and EIT Digital, in the first half of 2020 the region saw significantly more funding than in the same period of 2019. In Estonia there were 39 per cent more start-ups than last year. Latvia and Lithuania also recorded increases of 15 per cent and four per cent respectively. According to Enterprise Lithuania, the country’s startup ecosystem now matches that of Estonia: there are 1,043 start-ups in Lithuania, compared to 1,121 start-ups in Estonia and 400 plus in Latvia.

Foreign investment critical to Israel’s economy

Sebastian Sahadi, June 3, 2021,, How Tel Aviv enhanced its tech hotspot reputation throughout the pandemic

In short, foreign investors are highly important to the Israeli economy. Inward FDI flows accounted for 22.4% of Israel’s gross fixed capital formation (net investment) in 2019, according to the UN Conference on Trade and Development, compared with an international average of 7%.

Israel poverty outweighs on scope, poverty is worse there

Lior Dattel, 2013,, Israel Has Highest Poverty Rate in the Developed World, OECD Report Shows

Israel’s poor population has grown more than in any other OECD nation, making it the country with the highest rate of poverty, having exceeding Mexico, whose poverty rate stands at 20.4%.

Turn — increased Chinese investment in the Baltics creates security problems

LRT News, September 15, 2020,

The Baltic states and Slovakia remain Europe’s smallest recipients of China’s foreign direct investment (FDI), according to the 2000–2019 stats published by Politico Europe. Estonia, Latvia, Lithuania and Slovakia have each received just 0.1 billion euros in FDI from China in the 19-year period, according to Politico. When normalised by GDP, Estonia’s share of China’s FDI was the highest among the four countries with 3.6 percent – which overtook Poland’s 2.6 percent and Austria’s 2.8 – followed by 3.3 in Latvia, 2.1 in Lithuania, and 1.1 in Slovakia. Read more: Beijing eyes Rail Baltica investment – analysis The United Kingdom remains the largest recipient, which ballooned from 8.97 billion euros in 2016 to 20.9 billion euros in 2017 following the Brexit referendum. A train from China carrying parcels bound for 30 European countries arrived in Lithuania on Sunday A train from China carrying parcels bound for 30 European countries arrived in Lithuania on Sunday. / Lithuanian Post/Facebook screengra Trade relations between Lithuania and China have recently intensified, with the Lithuanian post and railway operators signing a deal with China’s postal service to become a regional hub for parcel deliveries. However, the country’s leaders, including Defence Minister Raimundas Karoblis, have previously warned that China’s investment into the country’s strategic infrastructure may pose security risks.

It turns the security contention, as it blocks the arrival of troops

IRT News, November 26, 2019,

Lithuania is fighting off China’s attempts to gain a foothold in the country’s only seaport in Klaipėda, according to Lithuanian Defence Minister Raimundas Karoblis. “We will not allow them the controlling [stake],” Karoblis told the Washington Examiner, adding that the status of Klaipėda has been on NATO’s agenda throughout 2019. “We can’t afford that China controls Klaipėda port.” As the majority of US and overseas NATO forces arrive via Klaipėda, Chinese entrenchment may pose strategic risks. Beijing could “create obstacles for the arrival of military cargoes, military equipment, [or] reinforcements” in a crisis, according to Karoblis. Lithuanian President Gitanas Nausėda also said in July that Chinese investments presented national security risks, even while the negotiations for Klaipėda’s 800-million-euro port expansion have dragged on for a decade.

[Another investment link]

The Lithuania Tribune, May 3, 2018,, Lithuania celebrates growing Chinese investment, but does it consider potential risks?

Foreign direct investment from China is on the rise in Europe and Lithuania, the country would also like to invest in a strategic object – Klaipėda port, however behind such investment there may lie the intent to take over high technologies, spy and increase influence in other countries. This was the argument presented to by European Economics and Social Affairs Committee member Gintaras Morkis and Seimas National Security and Defence Committee (NSGK) deputy chairwoman Rasa Juknevičienė. Over the past 10 years, China has invested and obtained property in Europe worth at least 318 billion US dollars. The extent and traits of certain investments, starting with important infrastructure in Eastern Europe to high technologies in the West has raised red flags at the EU level. Leaders such as Germany’s Angela Merkel and French President Emmanuel Macron are urgently demanding a joint strategy on how to handle China’s relentless push into Europe. Based on data from Bloomberg, Chinese state and private companies have been involved in at least 255 billion US dollars’ worth of transactions in Europe since 2008. China has obtained around 360 companies in Europe, Chinese subjects are also owners or co-owners of at least four airports, six seaports,, as well as wind power plants in nine European countries, while also owning 13 European football teams…Who exactly is dealing with investment and procurements in Europe shows that Chinese entry into Europe is not simply business – behind the purchases and investment there may lie official or unofficial Chinese foreign policy goals.