Globalization and economic integration, together with actual technological development and new internationalization strategies of MNEs, have promoted regions to relevant entities of economic activities in general and recipients of FDI in particular. The existing theoretical literature on FDI gives a good basis for the analysis of factors which determine FDI-flows at regional level and these include: microeconomic performance, region-specific institutional factors and forces behind agglomeration economics. Despite large inflows of FDI, Croatia failed to realize significant sector- and region-specific spill-over effects of foreign capital. The analysis of Croatian counties shows strong positive correspondence between local economies’ performance (sales, labour productivity, exports, net-wages) and the amount of inward FDI, thus indicating relative ineffectiveness of the FDI-promotion legislation so far. However, realized improvements in the exiting legislation and further development of business climate, elimination of administrative barriers, institution building and support to agglomeration economics should further improve location advantages of individual regions and Croatian economy in general for hosting FDI.

Ekonomija

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