EFFECTS OF DIRECT FOREIGN INVESTMENTS IN CROATIA

In modern economic processes direct foreign investments may play an important role as a factor of stimulating economic growth and development of a country, although in most recent economic literature there are contrasting thoughts in regard to the utility of direct foreign investments. It is an indisputable fact that the flow of funds from abroad helps increase the liquidity (solvency) and keep a favourable balance,although this has only a short-term effect. From a long-term and even medium-term point of view, foreign direct investments may be fruitful in the area of innovation and reconstruction of economy which could bring Croatia to a higher level of competitiveness. In relation to this the most important are the so-called effects of the spillover that are relative to knowledge, technology, market and processes. On the other hand, intensified investments bring about the ever increasing change of the structure of ownership, while at the same time there is a danger that the funds (means) are not adequately channeled. By a scientifically based analysis, the answers to the following questions will be given: whether technological development can be really promoted and improved, whether cost efficiency in the long run brings a higher level of competitiveness which is necessary for a successful integration of Croatia on the international market. At the end of the paper a conclusion is given about Croatia's efficiency in attracting direct foreign investments, what kinds of investments have been so far most freqently present and in which activities, what was their importance for the development and finally what kinds of investments Croatia really needs.