The last decade of the twentieth century was very successful for a number of ex socialist countries of Central Europe. That was the decade of prosperity, progress, and getting closer to the modern and developed European countries. This region (Slovenia, Poland, Czech Republic, Hungary, and Slovakia) comprises group of countries in transition, which are in the front line in the process oh transformation of their economic systems, implementation of economic reforms and attracting private foreign investments, first of all, foreign direct investment. In contrast to these countries, in the area of former Yugoslavia, the early 1990s were the years of complete disintegration, marked by economic sanctions, huge human causalities, and vast destructions. The dramatic political situation Serbia was in, caused heavy consequences on its social-economic development. The result is that Serbia today is one of the least developed countries in Europe. Position of Serbian economy drastically aggravated in the area of international capital flow. In this paper we analyze one form of international capital flow that can start up the Serbian economy – foreign direct investment. In the period to come, the development of our country will mostly depend on the value of foreign investments. Without direct foreign investments and conditions of low domestic savings, limited opportunities for crediting, lack of management knowledge, modern technology and export routes, there is not going to be any economic development in Serbia. In that sense, the most prominent is the need to affirm our competitory advantages and to remove the existing limitations for foreign investments so that conditions for foreign investors to realize in the fastest way their ideas for investments are created.