The Importance of Foreign Direct Investments in Serbia
November 30, 2017 by Nebojša Stanković
Over the past decade, Serbia has attracted over €21 billion of inward foreign direct investment. It has become one of the leading pools of direct investments in Central and Eastern Europe, which has helped the country significantly improve its overall development. Foreign direct investments stimulate lending activity, while reducing the volume of international credit financing. An increase in foreign direct investments provides international credit capital, as well as international portfolio investments.
Why Are Foreign Direct Investments Important?
Nowadays, foreign direct investments are becoming the key development factor in the global economy. They represent the leading mechanism of the globalization of world economy, right after the trade.
Foreign direct investments are of great importance for the process of transformation of national economies, especially in the case of developing countries where economic and social reforms are present. When it comes to developing countries and countries in transition, this form of financing provides the highest inflow of capital.
What Is Sustainable Development?
Sustainable development represents the sum of forms and methods of socio-economic development oriented towards the balance among social, economic and ecologic aspects and elements of natural capital. Capital ensures the long-term existence of the environment and the society in it, thus representing a new philosophy and concept of social development.
Since sustainable development is the key formula for averting an ecologic crisis, preserving the environment, protecting rights and promoting justice and equality among countries and nations on a global level, it can only be achieved when it is established under the conditions of respecting the environment, as well as respecting economic and social conditions.
Globalization and Economic Development
Globalization, as one of the basics of today’s integration of finances, trade and communication on a global level, represents an international balance for all the countries and nations, and has the goal of making the entire planet function as one single unit where equal standards and norms apply to all, and where the characteristics of each member, that is, each country are respected.
The strategy for economic growth in developed countries represents, among other things, the stimulation of economy in the territories of underdeveloped countries, countries in development, and countries in transition.
Various forms of subsidies, donations, benefits, and foreign investments contribute to the development of economy in those countries, and they are even more important in cases of globalization and integration. In the process of globalization, when the socio-economic structure of these countries is extremely heterogeneous, foreign direct investments are of great importance for the processes of transformation of their economies.
When it comes to international economic transactions that have a great impact on economic growth of counties, while overcoming the boundaries of national economies, it can safely be said that foreign direct investments are equivalent to the acceleration of the process of globalization of world economy.They are directed from developed countries toward countries in transition and countries in development that have market-oriented economies, that is, they are directed toward those countries where the processes of privatization and transformation have already been completed, and where the workforce is qualified and cheap.