An OECD Member country since 1996, Hungary has for the past ten years pursued its economic transition process with extensive reforms encompassing an active and liberal foreign direct investment policy. It has become one of the most attractive environments and preferred destinations for investors in Eastern Europe, with one of the highest per capita FDI inflows in the region. Privatisation has played a key role in the transformation of the Hungarian economy and in attracting FDI. Now, with this process virtually completed, Hungary aims at achieving an FDI ratio of 20 to 25 per cent of total investment by developing further greenfield projects, encouraging reinvestments and promoting small and medium-sized enterprises. This study charts the rise of FDI in Hungary and examines its role in the transition process, assessing the degree of openness of the Hungarian economy to foreign direct investors.