ANALYSIS OF FOREIGN DIRECT INVESTMENT DETERMINANTS IN THE SELECTED COUNTRY

Abstract

In the host country, foreign direct investment opens new work opportunities, positively influences workforce productivity, introduces the latest findings and technological know-how, and positively influences the balance of payments – thus also increasing the rate of economic growth. Viewed through a long-term perspective that takes indirect effects into consideration, foreign direct investment is nonetheless accompanied by many negative effects. Foreign direct investment is claimed to not necessarily support economic growth and employment especially in cases when foreign direct investment largely crowds out existing investments. Investors are claimed to also, not form ties with domestic companies, production also tends to be focused on technologically less complicated phases of the production chain, and transnational companies in the country are also believed to implement unfriendly strategies. Each country has certain factors that are important for investor decision-making. Many of these factors can influence the host economy and encourage interest from foreign investors. Some factors such as the position of the state, on the other hand, cannot influence the host economy. Investors generally prefer countries that are attractive for some reason. A unified definition of factors that are decisive for investors is quite difficult, however, Countries wishing to support the flow of foreign investment use variety of tools to attract investors, including host country promotion, investment incentives, or aftercare services. The aim of the paper is to identify, based on the available literature, the possible factors influencing the inflow of foreign direct investment into the country in general and using statistical methods to identify specific factors influencing foreign direct investment in the selected country. Using multiple regression analysis, the Gross domestic product, Corporation tax, Science and research expenditures and the Corruption perception index were identified as significant factors influencing foreign direct investment in the Czech Republic.