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The Characteristics of Foreign Direct Investments in Serbia

Author

Listed:
  • Pero PETROVIĆ

    (Institute of International Politics and Economics, Belgrade, Serbia)

  • Slobodan ČEROVIĆ

    (University of Singidunum, Belgrade, Serbia)

Abstract

The international movement of capital takes place in three main forms, namely: international mobility of credit capital, portfolio investments and foreign direct investments. Foreign direct investments (Greenfield investments) today are considered as the most desirable form of international capital. They represent such type of capital investment in the company through which ownership control over the company is being acquired. Direct investment of capital can be made in the existing company (modernization, expansion, etc.) abroad, or in the construction of a new capacities ("Greenfield investment"). In both cases the capital owner decides where to invest capital, how to organize production, takes care of the conditions of placements, the financial results of operations and the like, but also bears the risk of doing business. Therefore, foreign direct investments carry the highest business risk, but also bring the most revenue or profit. Foreign direct investments (FDI) play a key role in economic development. When it comes to the exporting countries, export of capital allows increased use of capacities, expansion of markets and new technology development, and essentially comes down to profit maximization, especially in medium and long term. When it comes to importing countries, import of capital provides an additional accumulation, transfer of new technologies and know-how without need to purchase a license, higher exports, the ability to finance new investments which affects the growth of employment, income, labor productivity, increase of budget revenues and other effects.

Suggested Citation

  • Pero PETROVIĆ & Slobodan ČEROVIĆ, 2011. "The Characteristics of Foreign Direct Investments in Serbia," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(6), pages 1-12, October.
    • Handle: RePEc:spp:jkmeit:1183
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    References listed on IDEAS

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    1. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," NBER Working Papers 9439, National Bureau of Economic Research, Inc.
    2. Frank Barry, 2002. "Foreign Direct Investment, Infrastructure and the Welfare Effects of Labour Migration," Manchester School, University of Manchester, vol. 70(3), pages 364-379, June.
    3. Barry, Frank, 2002. "Foreign Direct Investment, Infrastructure and the Welfare Effects of Labour Migration," Manchester School, University of Manchester, vol. 70(3), pages 364-379, June.
    4. Jože Mencinger, 2003. "Does Foreign Direct Investment Always Enhance Economic Growth?," Kyklos, Wiley Blackwell, vol. 56(4), pages 491-508, November.
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    Cited by:

    1. Slobodan Cerovic & Nemanja Stanišic & Tijana Radojevic & Nikica Radovic, 2015. "The Impact of Ownership Structure on Corporate Performance in Transitional Economies," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 17(38), pages 441-441, February.

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