Comparative analysis of the factors of attractiveness for foreign direct investments in the developing and developed countries
// Finance and Management. – 2020. – є 1.
– P. 38-52.
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Abstract: With the cooling of global economic and exhaustion of internal sources of finance, the countries need to attract foreign investment in form of foreign direct investments (FDI) to stimulate economic growth. The subject of this research is the factors defining the inflow of foreign direct investments into national economies, as well as comparison of the factors impacting attracting of foreign capital into developing and developed countries. For comparison of the inflow of FDI, the work utilizes the following factors: openness of trade, wages, size of the market, development of infrastructure, and tax policy. In the next few years, developing countries will continue to maintain an edge in size of wages, but due to drastic difference in the quality of labor resources, developed countries will be more preferable from the investment perspective. In absence of the necessary infrastructure and without additional support or stimulus of the receiving state, decisions on investments will lean towards the more accessible markets of developed countries. As a result of limited business environment, high level of expenses for starting a company, and inefficiency of the market, the state needs to provide clear communication regarding the vector of government policy in the area of investments and refrain from inconsistency in passing measures. If companies would not be certain in the future of the political course, their profit expectations would rise significantly, while investment activity would drop.
Keywords: openness of the economy, growth factors, competition, developing countries, investment attraction, human capital, foreign direct investment, economic development, return on investment, risks
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