This thesis looks into how institution reforms affect the FDI in Hungary by analysing the the institutional quality and economic factors from 2004 to 2023 with its FDI in flows. The result shows that institutional quality has only a limited impact as Hungary's governance remained revaltively stable during the seleced period whie FDI fluctuate a lot. Instead, ficsal measures and active goverment coordination play a stronger role in attracting FDI. Once institutioanl stability is achieved, practical policy can ensure continued investor participation and become the main drivers of foreign investment.