Direktne strane investicije i BiH
Foreign Direct Investment and B&H

Summary/Abstract: This paper intends to show key characteristics of foreign direct investment and their importance to the economy of a country. In the case of foreign direct investment both foreign investors and host country seek to maximize their own benefit. However, both sides are facing a number of risks and problems which present a big obstacle to the realization of their ideas. Final result of the entire process of foreign direct investment depends primarily on the degree of development of the domestic economy and the ability of local governments to make the best possible way to exploit the benefits of foreign direct investment. Transition countries, which include Bosnia and Herzegovina, need foreign investment for a successful and sustainable development, considering that these transition countries lack capital. To attract foreign investors, it is necessary to establish a favorable investment climate and use efficiently a rich range of incentive measures available to governments. This paper shows that BiH has not yet created a stimulating environment for foreign investors and as a consequence BiH has noticeable lagging behind neighboring countries, the negative effects on economic development in BiH, insufficient usage of its own economic potential and a decline in life standard.

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