There have been anxieties in many parts of the world about the future of investment flows from east Asia, as a result of the region's economic crisis. In east and central Europe there are special fears about the apparent collapse of South Korea, which has been an important source of foreign investment in Poland and Romania. Our economics correspondent James Morgan says that the indirect effects of the crisis could prove to be more damaging than the direct results:

In 1996 the flow of foreign direct investment to central and east Europe fell slightly to $12bn. That was relatively small in global terms - less than was attracted by Malaysia and Singapore in the same year.

The main investors in the region were companies from the European Union followed by the United States. East Asia was the third most important source, but South Korea was the most important investor from that region.

Its main targets have been Poland and Romania. Romania has in fact received little investment from elsewhere and that which has come from Korea has attracted unfavourable publicity because of the manner in which the Daewoo company gained a foothold - by supplying a telephone exchange for the parliament free of charge.

It is most unlikely that any new investment from Korea will be announced in the coming year. But the difference that will make will be less than can be expected from normal annual fluctuations.

More important will be the changing attitude towards investing in emerging markets - east-central Europe is placed alongside other areas such as Latin America and southeast Asia in this grouping. The International Monetary Fund has estimated that total foreign investment in these markets could drop by $100bn dollars, or more than half, on a worst-case scenario.

That is because investors in rich countries have become worried by developments in what they regard as exotic regions.