Abstract
The paper analyzes the importance of foreign direct investment and their impact on the new economy as well as the motivation factors for foreign direct investments. Process of integration of the world economy influences the changes in the attitude of the countries of the recipients of capital in relation to foreign direct investments. Today, there is a favorable climate on the investment in developing and transition countries, because these countries no longer watching with suspicion. FDI entry controls are customized adapting to selective state policies in order to boost their investment volume. The effects of foreign direct investment in developing and transition countries are not equal, as all countries do not have the same performance. The success of securing FDI inflows depends on the chosen strategy of each country and on the overall level of social and economic development of the country. The ability to government and domestic companies is to optimally take advantage of foreign direct investment. The paper analyzes the positive and negative effects of direct foreign investments for certain macroeconomic indicators of the Republic of Serbia.
Highlights
Foreign investment, in its widest sense, implies all types of investments of foreign legal and natural persons in the economic activities of a country
The parameter shows that when the GDP growth rate per capita increases by 1 percentage point, the net inflow of Foreign Direct Investment (FDI) as a percentage of GDP is growing by an average of 0,265 percentage points, with other variables unchanged
The Republic of Serbia needs to assess the possible risks of such entry, because foreign direct investments are not an automatic solution to all problems, the positive effect is related to the environment itself within the host country, or the absorption capacity of the host country
Summary
In its widest sense, implies all types of investments of foreign legal and natural persons in the economic activities of a country. Since foreign direct investments of transnational companies are recognized as one of the basic channels by which developing countries gain access to stateof-the-art technologies whose diffusion plays an important role in explaining economic growth, there is a competitive struggle to attract foreign investors. In addition to obtaining capital, significantly contribute to internal and external liberalization of national economies, reintegration into international division of labor, change of ownership through privatization, sectoral restructuring of the economy, introduction of modern managerial and marketing knowledge, easier acceptance of developed technologies, intensification of research development activities , as well as easier access to important international financial institutions and markets around the world. It is important to point out that there is a significant conditionality between the legal regulations of national legislations and the inflow of foreign capital, as well as its contribution to export orientation and faster growth of gross domestic product, market openness, technological development, reduction of unemployment of the country of receiving capital
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