【正文】 ed. Baniak et al. (2020) examined the general determinants of FDI in transition economies. There have also been studies about the influence of various regulatory institutions on the performance of particular segments in some transition economies. Glaeser et al. (2020), for example, pared the Polish and Czech capital market developments. The quality of regulation was shown to be very important for the development of Polish capital markets. Bevan et al. (2020) extensively studied the importance of the institutional environment for FDI on the basis of the transitional indicators by the European Bank for Reconstruction and Development (EBRD) focusing on the type of ownership, banking sector reform, foreign exchange and trade liberalization, and legal development. They found a strong relationship between formal institutional development and FDI. Also Grogan and Moers (2020) focused on the importance of institutional quality for FDI on the basis of EBRD data and found that especially the role of the state is important. Frenkel et al. (2020) studied bilateral FDI flows to emerging markets by focusing on a gravity model but found that the country risk measured by Euromoney risk rating is also important for FDI flows. Smarzynska Javorcik (2020) studied the importance of intellectual property investors are heavily deterred by poor protection of property rights especially in the technologically intensive sectors. We extend, or supplement, the preceding analyses in several aspects. First, we provide a prehensive rationalization of the importance of foreign capital for economic growth in transition economies via the exportled model of growth. Second, the analysis of the potential impact of institutions on FDI in transition economies is based on the Heritage Foundation data, which differ from the EBRD data. Ten areas of institutional quality are inspected and evaluated. The overall index of institutional quality prises all ten subareas. Data confirm the importance of institutional quality. The article thus provides an additional confirmation that institutions matter and that the robustness of their impact does not depend on the source of the data and the position of the index of institutional quality. The paper is structured as follows. After the presentation of data on FDI in transition economies, we analyze the importance of foreign capital for economic growth in transition. 4 Then we consider the potential impact of various aspects of institutional framework in transition economies. A more rigorous econometric analysis follows, assessing the quality of the institutional environment as a determinant of FDI in transition economies. FDI and quality of institutional environment in transition economies Stylized facts on FDI and institutional environment quality In our analysis we relied on the definition by the Heritage Foundation1 which describes the quality of the institutional environment in a given economy by, evaluating ten areas, each being awarded a grade on a scale from 1 (best) to 5 (worst). All subgrades are then used to form an overall index of institutional quality. The Heritage Foundation data bined with the facts on FDI inflows (Table 2) seem to suggest that there is a threshold of overall institutional quality at around that the economy must ensure to facilitate enough stability and certainty for foreign investors to e in more significant amounts. Bulgaria and Romania, for example, significantly improved their institutional quality, especially in trade, fiscal burden, and moary stability. In the light of the process of their accession to the EU, which is taking place in 2020, both economies have been very devoted to reforms. These institutional reforms were crucial for the change in foreign investors’