Abstract
Foreign investment is a key factor in the development of a modern economy, the trade, the most important means of enterprise business, the organization of production, supply of goods and services worldwide. Through foreign investment, companies organize production on a global scale, provide an efficient supply of raw materials, energy, labor, and then sell their products and services in the most important markets in a profitable way. Based on such a business, companies can optimally utilize its advantages in technology, knowledge, and economies of scale. Developing countries due to debt and unfavorable economic conditions are showing interest in foreign investment, especially when various loans and financial help stop arriving. Transition countries integrate into the world economic system, negative economic tendencies can be overcome by international capital movements. Developed countries faced to a financial crisis, are also interested in the sizeable input of foreign capital, where foreign investment becomes the most important element of development strategies. This work gives special attention to the input of foreign direct investments and their effects in Bosnia and Herzegovina.
Highlights
One of the important features of the world economy in the last three decades has increased the volume of foreign investment
Foreign direct investment is a major form of private equity investments in developed countries to developing countries
The key question is, how effective is foreign investment used in Bosnia and Herzegovina and its contribution to economic development
Summary
One of the important features of the world economy in the last three decades has increased the volume of foreign investment. Foreign direct investment is a major form of private equity investments in developed countries to developing countries. The direct foreign investments is a form of investment in which the investor provides the right of ownership, control and management of the company to which the funds are invested, in order to achieve a long-term economic interests. Through this form of investment, the foreign investor acquires its active role in the work and operations of the company in which the funds were invested. Foreign direct investment is defined as a form of capital, whose investment in a specific company, acquired ownership control over it. Foreign direct investment is defined as a form of capital, whose investment in a specific company, acquired ownership control over it. (Pušara, 2004)
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