In consequence of the mid-1990s' radical macroeconomic reforms foreign direct investments started to play a remarkable role in the small and very open Estonian economy. Currently Estonia ranks among the top transition countries by per capita indicators of the inflow of foreign direct investments. This book provides detailed analyses of foreign investors’ performance in Estonia during the period of economic transformation. It discloses the motives of foreign investors entering Estonia, and their role in making the Estonian manufacturing industry more competitive by way of bringing in capital and technology, retraining employees and opening new export markets. Without foreign direct investments the integration of the Estonian manufacturing industry into the inter-national division of production would undoubtedly have been a more lengthy and complicated process. This book is based on the work of a group of researchers in the Faculty of Economics and Business Administration at the University of Tartu.