THE ECONOMIC EFFECT OF FOREIGN DIRECT INVESTMENTS IN LATVIA

Abstract

Attracting foreign direct investments is one of the main ways to promote the development of national economy, and these are important from the point of view of increasing competitiveness and faster, quality economic growth. Foreign direct investments can increase insufficient internal savings, ensure the placement of globally effective factories, access to foreign technologies, improve management, facilitate access to foreign markets through foreign partner distribution networks, and improve goods quality and design. The foreign direct investment issue is important in Latvia due to many factors, such as the state of economy and small production opportunities. The decrease in foreign direct investments in Latvia can be explained not only by the negative trends in the world economy but also by the inability of Latvia, for years, to solve legal, healthcare, education, tax system, and other problems. In this work the author shall assess the role of foreign direct investments in the economy of Latvia, which are the biggest investors, how to attract new investors, and the dynamics of foreign direct investments in the last 8 years.