REGIONAL INVESTMENT ACTIVITY OF CROATIAN ECONOMY

Using different policies, countries around the world seek to attract foreign investors as nowadays the economic theory does not deny positive effects of FDIs on growth. Naturally, this does not mean that FDIs do not have any negative implications for the economy but these negative effects can be offset using transparent and efficient regulation measures as well as a clearly defined country development strategy, and foreign investments can be used for economic growth. However, Croatia and other countries in the region need special types of FDIs. Since these small and open economies have reduced the scale of their production during the difficult transition process, FDIs should be directed towards greenfield projects which are also export-oriented. Only then will it be possible to consider accelerated economic growth in the context of foreign investments. Therefore, the first part of the paper deals with defining and evaluating the main FDI determinants as well as their positive effects on the economy. The second part of the paper focuses on the analysis of FDI inflow into Western Balkan countries, with a special emphasis on Croatian investment activities in the region. Croatian entrepreneurs have achieved good results in the regional market, whereas investments of Western Balkan countries in Croatia have been quite modest. Bearing in mind that Croatia will soon become a member of the European Union, it is crucial that it takes every opportunity provided by regional integration and prepares its entrepreneurs, exporters, labour market, etc. for severe competition at the common market.