FRIEDRICH-EBERT-STIFTUNG – A NEW GROWTH MODEL IN EU-CEE sition of the Italian parent bank(Goclowski 2016 and Ro­hac 2017). Because of this and other transactions, half of the previously foreign-dominated Polish banking sector be­came domestically owned. In the Czech Republic, the in­formation and communication sector showed negative FDI inflow in 2017; this indicates a sale of foreign assets to do­mestic investors prone to government interference. In Ro­mania, the state-owned special financial institution Ex­imBank acquired the commercial bank Banca Romaneasca, the local subsidiary of the National Bank of Greece, after the Romanian National Bank blocked the purchase request of the Hungarian commercial bank OTP(Romania Journal 2020). In this context, the role of FDI has diminished as a source of external financing. The abundant transfer of EU funds un­der the 2014–2020 financial framework further weakened the political status of FDI. It goes without saying that gov­ernments appreciate the freedom they have in distributing foreign grants to direct capital inflows by companies where they have only weak and indirect control. EU grants thus increased the role of governments in the economy(Civitas Institute 2018 and Innes 2014). Foreign investors have a generally positive opinion of coun­tries with a liberal economic environment and dislike un­predictable state interventions. This can be seen in the an­nual survey of the German Chamber of Industry and Trade (tschechien.ahk 2019). The scores given to EU-CEE in the 2019 survey are quite close to each other: between 2.8 and 3.5, on a scale of 1–6, where 1 is the best. There was a change in the top raking compared with the previous year from the Czech Republic to Estonia. The advantage that the top two have over all the other countries is the quality of the workforce and the quality of government. Poland, Slovakia, and Slovenia follow, in that order, in strong posi­tions. Investors see relatively more problems in the second half of the top-ten list, especially in Hungary, Romania, and Bulgaria, which have the worst scores. This does not mean that investors would leave these countries; they keep in­vesting as long as factor costs are attractive, local markets are growing, and governments do not infringe their free­dom of movement. 3.2.3 IMPACT OF COVID-19 AND TECHNOLOGICAL CHANGE The coronavirus pandemic has triggered restrictive meas­ures on societies to limit the spread of the virus. The result was production collapse, disruption of supply chains, and the closure of several industries in the first half of 2020. Cross-border investments were immediately affected, al­though financial flows in new projects stopped with a time lag. FDI projects that had been scheduled to be imple­mented suffered delays. Earnings from previous years were often channelled back to home countries. Investors initiat­ed programmes to shorten the supply chain, and govern­ments were eager to increase local self-sufficiency, espe­cially with regards to the production of medical products. Global FDI inflow data comparing the first half of 2020 with the same period in 2019 shows a 49 percent decline Figure 3.7 FDI inflow in the first and second quarter of 2019 and 2020, EUR million 6000 5000 1Q 2019 1Q 2020 2Q 2019 2Q 2020 4000 3000 2000 1000 0 BG CZ EE HR HU LT LV PL RO SI SK -1000 -2000 Source: wiiw FDI database relying on National Bank statistics. 26