COMPARATIVE ANALYSIS OF FOREIGN DIRECT INVESTMENT FOR EURO AREA AND NORTH MACEDONIA
COMPARATIVE ANALYSIS OF FOREIGN DIRECT INVESTMENT FOR EURO AREA AND NORTH MACEDONIA

Summary/Abstract: As a result of the globalization process, the level of foreign direct investment in the second half of the last century, in the world level took a big boost. Liberalization processes and the removal of various barriers, especially trade barriers and those of free capital movements, accelerated this process. Each country wanted to get as much as possible of this increase in the investment level to stimulate their local economies. In contemporary literature, investments are considered as an important stimulus factor of economic development, therefore it is very important to identify the factors that make a country attractive to foreign direct investments. It will be very interesting to analyze the impact of the euro, as a common currency, on the movement of capital, which then influences the decisions of international enterprises to invest in a certain market. Another important factor that affects the inflow of foreign investment is the uncertainty that international firms may feel, especially the type of uncertainty that has to do with exchange rate volatility. Coverage from this type of eventual risk increases the importance of membership in a monetary union, which has consequently the elimination of this exchange rate volatility risk that affects in turn positively the level of foreign direct investment. The comparison will be made for the period immediately after the adoption of the euro as the common currency, for certain member countries that will be divided into four groups. A detailed composition of the investment level of North Macedonia will be presented and will be provided an answer to the question of whether the foreign direct investment attracted by the euro area is higher than that of countries that are not members.

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