The Characteristics of Foreign Direct Investment Intensification Policy
- Publication date
- Publisher
- RTU
Abstract
The article analyses the determinants of foreign
direct investments, addresses the problem of attracting targeted
FDI and highlights the incentives, which constitute the FDI
policy. However, it can be observed that the governments in a
number of countries seek to attract FDI at any price. The article
seeks to define the aspects of successfully implemented FDI
policy.
Ireland, Canada and China have been chosen as the countries of
good example of FDI policy. Ireland is the first country to
implement FDI policy successfully. It employs a purely liberal
FDI policy, which covers all business sectors; Canada implements
a strictly regulated FDI policy while China adopts a liberal and
aggressive FDI policy.
The empirical analysis reveals that there is a strong positive
relationship between inward FDI and investments in attracting
foreign capital. In China’s case a strong positive relationship
between FDI and other determinants gives evidence that the
growth of economy is highly dependent on foreign capital.
Meanwhile, Canada, which attracts tremendous FDI flows, stays
least dependent on MNCs. A lower than average relationship
between FDI flows and the openness of the country shows that
Ireland attracts horizontal FDI. The analysis of three cases
proves that the success to attract FDI is dependent on the
government’s ability to employ FDI policy