The paper discusses foreign investment in South-East European countries, drawing lessons from Central European countries. It suggests that attracting foreign investment can help these countries grow faster. Privatization can attract foreign investment and lead to faster restructuring. Foreign-owned businesses in Central Europe have improved competitiveness. However, foreign investment can also lead to current account deficits. Weak public institutions and corruption have hindered policy effectiveness in South-East European countries. To improve, these countries need simple, stable, and transparent policies, as well as support for regional integration and small businesses.