The role of foreign direct investment in the economy of Slovakia

Judita Táncošová

doi:10.9770/jesi.2019.6.4(40)

Abstract

In the paper, we point out the role of FDI in the Slovak economy, analyze their status in the period from 2010 to 2015, suggest their regional and branch aspect. FDI is an effective form of international business that complements lack of internal resources and contributes to economic growth. As competition of FDI is very strong, it is important to create appropriate economic, political and legislative conditions that the economy is capable of creating for foreign investors. The state of FDI in the Slovak economy has been gradually increasing since 2010, but its large sectoral and regional imbalances appear to be unfavorable. The impact of FDI on GDP development indicates that each FDI unit contributes to economic growth, respectively GDP growth; it affects employment and contributes to the solution of unemployment. The problems of FDI in the Slovak economy are one-sided positioning in the automotive industry and at the same time their location in the developed regions, i.e. in the area of Western Slovakia.

Highlights

Foreign direct investment (FDI) is generally regarded as an effective form of international economic relations and international business and can directly contribute to a significant increase in investment resources in each economy
The problem of individual economies is the lack of internal resources and FDI is an indispensable complement to them, which increases economic growth, affects employment, improves technological management know-how and positively affects other areas of the economy
Our intention is to find the answer to the research questions: What is the impact of FDI entry on the economy of Slovakia in the period and do they contribute to economic growth and reduce unemployment? Is it possible to achieve better regional and sectoral directions for the FDI to Slovakia, which are the main causes of this situation in the period under review?

Summary

Introduction

Foreign direct investment (FDI) is generally regarded as an effective form of international economic relations and international business and can directly contribute to a significant increase in investment resources in each economy. Another possible approach to investigating FDI is the decision of foreign investors to locate them in a particular economy or region. The entry of foreign investments affect socioeconomic relations in economies, for example by influencing the labor market, employment, and often lead to the growth of migratory movements, especially in economies that imply economically more favorable conditions. These facts are reflected, for example in I. Our intention is to find the answer to the research questions: What is the impact of FDI entry on the economy of Slovakia in the period and do they contribute to economic growth and reduce unemployment? Is it possible to achieve better regional and sectoral directions for the FDI to Slovakia, which are the main causes of this situation in the period under review?

Development of FDI inflow into Slovakia and economic growth

Findings

Conclusions