Simultaneously with political transition in Middle and Eastern European countries goes the economical transition. Usually direct foreign investments built the connection between developed countries and developing and transition countries. Numerous experts talk about influx of foreign capital to host country which has a positive influence on balance of payments, gross domestic product, investments and economy in general. Foreign direct investments form horizontal and vertical effects which depends on reciprocal interaction between business subjects and multinational companies. First chapter of this thesis will focus on multinational companies, displaying their development and depicting their role on today’s market. Foreign direct investments in transition market become non-refundable funds invested by a company in developing and transition country. Transition market is an open type market, which are nevertheless sometimes unable to connect subjects and use all positive effects offered by the multinational companies. All countries in transition are wee aware of the importance of foreign capital because of their own lack of one. Developing and transition countries compete for foreign capital and position themselves on international market in order to increase capital. On the other hand, capital holders, multinational giants are trying to lower their costs and using orientated strategies, use economies of scale; „low cost of labor, low taxes“, etc. International capital market is filled with motives of host countries and capital holders. The state is under pressure concerning decisions in the field of taxes, state incentives and benefits, because the multinational companies wish to attain high profit in short term of time. Host country's policy influences multinational company's business. If the country and other business subjects on the market establish good relations and connections with multinational companies in short term, they can expect long term positive effect on influx. In this thesis it will be set all the channels of investment influx, for example the imitation of multinational companies by domestic companies. There are experts who examine visible evidences of positive effects on economy due to influxes. Their conclusions will be introduced in order to emphasize the importance of effect of influx. Last chapter incorporates institutions which locally and globally monitor unobstructed conduct of economic activities on developed markets and transition countries' markets.