GENEVA -- Foreign direct investment in the the former Soviet bloc surged in 1994, a sign of cautious outside confidence in their economic recovery, UN analysts said Tuesday.


The UN's Economic Commission for Europe said preliminary statistics for 15 ex-communist states in the region showed their total stock of FDI had grown by 24 percent to a total of $22.7 billion. The figure represented a jump of $4.4 billion from a total stock of $18.3 billion at the end of 1993, but ECE analysts noted it was focused on a handful of transition economies and was a fraction of FDI going to developing countries.


"The figures show that something is moving in terms of growth of confidence," said one economist who tracks developments in the region.


"But the transition states have still got to come up with a competitive, risk-adjusted rate of return if they are going to attract the sort of investment that goes into Latin America or Asia."


The figures, published in the autumn issue of the ECE's quarterly East-West Investment News, showed that five countries at the forefront of economic reform -- the Czech Republic, Hungary, Poland, Slovakia and Slovenia -- accounted for 72 percent of the total FDI stock of the 15 states surveyed.


Market reform leader Hungary remained by far the main attraction for outside investment with a total of some $8.7 billion at the end of 1994, well over twice as much as that which went to Poland or to the Czech Republic.


But Hungary's percentage of the overall total dropped from 44 per cent at the end of 1993 to 37 per cent, as there was some diversion of foreign funds to smaller states in the region.


The share of the other major host countries -- the Czech Republic, Poland and Russia -- remained stable at between 13-14 per cent for totals ranging from $3 billion to $3.5 billion.


FDI stocks grew fastest among the 15, although starting from close to zero, in Latvia and Moldova, with Estonia, Romania and Bulgaria coming close behind. Of these, only Romania came close to an overall total at the end of 1994 of around $1 billion, while the others were well below that figure.


In a special study of Moldova, the ECE publication said overall FDI stock there grew more than three-fold during 1994 from $7.2 million to $24.8 million and had reached $29.5 million by the end of March this year.


Nearly 68 percent of the total was from member countries of the European Union and 7.8 percent came from the United States. Of the total, 64.7 percent went into service industries and 31.6 percent into manufacturing.