The Role of FDI in the Economic Development of Transition Countries: The Case of Republic of Macedonia

Abstract

The increased of foreign direct investment (FDI) worldwide, as a driving forces of globalization, is the main characteristics of a new world economy. Understanding of the contradictory nature of FDI as the main factor for integration and disintegration processes is crucial to define their place in the government policy to attract FDI and assess their importance for the economic development of the country. Therefor the objective of research in the paper is the relationship between foreign capital inflow and FDI-related polices in transition economies, due to the country's economic development. We analyze the FDI determinants in the Republic of Macedonia according to OLI-Paradigm. The research in the paper is made with the SWOT analysis in context of the FDI policy of the country. The conclusion is that Republic of Macedonia has to ensure their specific location advantages in order to transform FDI in the economic development.