Motives and Determinants of Foreign Direct Investment in the Republic of Macedonia

Abstract

In order to design appropriate Foreigh Direct Investment (FDI) attraction policies there is a need of exploring which are the key motives and determinants of FDI inflow in the host-country.
 The aim is to see whether the Republic of Macedonia follows the global trends due to FDI in transition countries and, in this regard, to research the reasons for the low FDI inflow in the country. 
 The paper is organized as follows. In introduction we point the importance of FDI inflow in transition countries, and in this context we emphasize the importance of the motives, and therefore the determinants that conditioned the FDI inflow. Section I review the theoretical framework on the FDI determinants, with particular reference to the OLI paradigm. Section II analyses the inflow and structure of FDI in the Republic of Macedonia. In order to explore the FDI motives and determinants in the Republic of Macedonia, which will serve as a reference framework for defining the future direction of policy related to FDI in the Republic of Macedonia, in the third part an empirical research has been conducted in the form of a questionnaire. The conclusion defines the key findings in context of the policy for attracting FDI in the Republic of Macedonia.