The Czech Republic entered the transition process with a strong industrial heritage and an extensive, but obsolete infrastructure showing the effects of over 40 years of central planning. Throughout the nineties, the extensive reforms undertaken have helped reintegrate the Czech Republic into the global economy through measures such as privatisation and the creation of a favourable and liberal investment climate which has led to a surge in FDI in recent years in particular. The Czech Republic became a Member of the OECD in 1995. The Czech government is committed to addressing the need for further industrial restructuring and to completing the privatisation process which has played a key role in the transformation of the Czech economy and in attracting FDI. With this process virtually completed, the Czech Republic now has the challenge of sustaining FDI inflows in the future through further greenfield projects and reinvestments and improving backward linkages to domestic companies. This review charts the development of FDI in the Czech Republic and evaluates its role in the transition process, assessing the degree of openness of the economy to foreign direct investors.