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•    The EU Baltic Sea Region Słratrgy has significantly enlianced co-ocdinatiou across existing organisalions. networks. projects. and financing tools. This has been achieved be 'repurposing' the existing stnictnre of iiistitutions and policies thał were mostly developed m a differenl context. If the ambition is to accomplish morę. morę fimdamental changes inthis institutional aichitecnue are needed.

•    Transpodation infrastnicmre and green growth are two topics of specific importance for the Baltic Sea Region and its futurę competitiveness. In both areas. regional collaboration. given the naturę of the Region, is aitical for makmg fuli use of existing opportunities

•    The level of regional collaboration still remams strong willi balanced positions on labour productivity and mobili zali on. It however needs to continue deepening its integration. The BSR has been lut hard by the financial and economic crisis althougli tliere are substantial differences across the region.

1'orrign direct invrstinnit in the Baltic Sea Region:

FDI brings economic activity in different coiuitiies into one organization. the multinational enterprise (MNE).♦ geneiates intensive exchanges between the business tui its in different countries. such as nade. managerial knowledge transfer, and fuiancial imestment - spillover effecis

•    Seenas a catalyst to economic growth and developmeiu

•    Economic integration had been artificially disntpted from the 1940s to the 1980s

•    Investors transfer financial Capital; they transfer bundles of other factors and resources. such as technology and other types of knowledge induduig managerial experiences and organisational templates or designs.

•    In transition economies such as the Baltics. Poland and Russia. FDI moreover facilitates the microeconoinic transition from plan to market economy

•    SpiIlovers are limited if foreign investors operate m endaves isolated from the resi of the economy or at great technologual distance from localfirms.

•    Negative: foreign uivestors crowd out domestic competitors or attain a dominant market position

•    .Vloreover. FDI mfluences the pattern of regional uitegration by promotmg nade specialization

•    Through trade. countries. especially smali ones. may grow faster by cateruig to larger markets.

•    Similar results are observed in Poland. wliere foreign•owned firms have a higlrer Capital and expotl urtensity. However. in Poland domestic firms are often larger than their foreign competitors

•    Most foreign investors in Central and Eastem Europę (CEE) pursue local markets; there is considerable peni-up demami

•    Ali important opportiuiity for foreign investors has been their participation iii the pmatization process.

•    Latvia. like Estonia is above the Eastern European average while Poland and Lithuania received FDI on par with the regional average.

•    Geographic and cultural proximity facilitate the flow of FDI among individual countries.

•    Estonia. Lithuania and Poland are already strongly integrated into EU multinational networks. while this is much less the case for Russia

•    imestments are morę likely to take place between coioitries of similar size

•    outward FDI is of increasing importance to the inteniational business of local firms from the Baltic States.

Reasons for foreign trade

• Low labour costs