engleski

Is Foreign Direct Investment Helping Croatian Competitiveness?

The data for Croatia show that the effect of FDI has so far been limited to the companies that received FDI. The increase in their labour productivity was quite significant. Also, the bulk of their output went into exports thus pointing at their ability to compete in foreign markets. However, the overall effect of FDI on Croatian competitiveness has been quite small. It is mainly because most of FDI inflows are privatisation related and go into existing, previously quite successful companies. There has been a shortage of investment into less successful companies which would be necessary to support their restructuring and to encourage the restructuring of the economy as a whole. Also, greenfield investment has been almost negligible, especially in the manufacturing sector. In terms of policy recommendations, we conclude that creating and maintaining a positive investment environment with no discrimination between domestic and foreign investors, and in which a rule of law is fully in place, is a prerequisite for any sustainable long term development and growth. Identifying the Croatian competitive advantages in building a long term strategy of attracting particular types of FDI is essential because FDI is an auxiliary method which can speed up processes by helping the country that uses it wisely to bridge the development gaps more elegantly.

Foreign direct investment, Croatian economy, growth, competitiveness

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