Economic and legal aspects of foreign direct investment patterns in Serbia and Latvia

Abstract

The study analyzes economic and legal aspects of foreign direct investment patterns in Serbia and Latvia. Its topic is relevant due to the fact that international investment in the modern world is one of the most important factors in sustainable economic development. The aim of this study is to examine,summarize and compare the investment climate and experience of attracting investments in two different European countries - Latvia and Serbia, paying special attention to economic and legal aspects. Another objective is to identify and describe foreign direct investment patterns in the two countries. The methods employed the study include comparative analysis, descriptive approach, statistical analysis.Moreover, the regulatory framework and incentives are analyzed by applying the methods of content analysis. Our findings indicate that in both Latvia and Serrbia, the problem of the correct definition of the term “investment” is partially resolved at the legislative level (in Latvia - also in the context of the entire European Union). We believe that any uncertainty in the definition of the term "Foreign Direct Investment" should be eliminated in the coming years through the unification of pan-European legislation. For countries such as Latvia and Serbia (due to their economic characteristics), foreign investment is of particular importance. If these investments are well distributed in terms of the spatial planning and sectorial structure of the host country, then they act as unique locomotives, contributing to national exports and economic development. Another feature of the influence of foreign investment on the economic environment of Latvia and Serbia is that it brings in not only capital, but also promotes development of entrepreneurship. In the last decade, there has been a steady increase in the volume of investments in both economies. Although the growth is due to different reasons, these dynamics have a positive impact on the future development prospects of both countries. Legislators of both Latvia and Serbia promptly respond to the economic challenges of the modern world, improving national regulations. Despite the differences in economic indicators, legal regulation, n history, and geography - the investment climate of both countries could be characterized as attractive.