Foreign direct investment in the Republic of Serbia: Correlation between foreign direct investments and the selected economic variables

Abstract

Foreign Direct Investment (FDI) in the theory of economic thought is considered to be an important factor for country’s growth and development. By encouraging multinational corporations to invest, host countries hope to generate spillovers because FDI transfer intangible assets to the affiliate, which may then diffuse to local firms. Serbia is integrating into European economic space with a significant delay. Despite a thunderous decade of wars and ethnic tussle, late transition and financial crisis, Serbia has experienced significant FDI inflows in the last decade, mainly because of the improved policies attracting foreign investors. The aim of this paper is to analyze the correlation and significant degree to which the examined variables are associated with each other. The economic variables cover 12 years (20072018). The main focus is on those variables that are considerably influencing changes and impact on FDI in Serbia. The study uses SPSS to analyse the correlations among the selected eight socioeconomic variables. The examined variables are: industrial growth, unemployment rate, employment from age 15 to 65, foreign trade balance, FDI inflows, FDI outflows, GDP growth, and the share of value added products in the exports. For this analysis the data from the Statistical Office or the Republic of Serbia, the National Bank of Serbia and the Ministry of Finance has been used. There is a very weak correlation between FDI inflows and the unemployment rate. Also, our results suggest there is a very weak correlation between FDI inflows and increased GDP growth. The GDP growth has strong correlations with the industry growth, FDI inflow and FDI outflow.