Understanding the foreign direct investment environments in EU 27+ candidate country Croatia: the current determinants and patterns

Abstract

Foreign Direct Investment (FDI) has the potential to generate employment, raise productivity, transfer skills and technology, enhance exports and contribute to the long-term economic development of the world's developing countries. Contrasted with the previously published research, our paper provides an explicit analysis of the extent FDIs depend on technological preconditions and macroeconomical factors with a sample of three groups of countries (EU 15, EU 25 and EU 27+ Croatia). The paper presents the factors that have the greatest impact on the FDI in some countries/sectors of the economy, followed by a discussion of the previous research. Additionally, we examine whether direct FDIs have a significant impact on the Gross Domestic Product (GDP) the year after investment occurred. Due to several factors, sometimes, the balance of payments data do not fully capture the value of the accumulated assets. The supporters of FDI have suggested that foreign investment can bring capital and technology, develop skills and linkages and increase employment and incomes. In this research, regression and correlation analyses are utilised.