IMPORTANCE AND IMPACT OF FOREIGN INVESTMENT ON THE ECONOMIC DEVELOPMENT OF BOSNIA AND HERZEGOVINA

Abstract

From the perspective of macroeconomic indicators, investment is a significant determinant of
economic development as a whole, as well as the development of economic entities in the micro
segment. Investments present an essential element of any economic policy, as their presence
provides a platform, not only for economic development, but also create a basic condition for the
stability of economic and social trends. Foreign direct investment plays an important role in the
financing of the global economy, and the most common presenting the most important tool in
financing the national economies of developing countries and countries in transition. Demand for
foreign investment in the global market is large and therefore the states are directing significant
activities in order to create a more favorable environment to attract investors. The paper pays special
attention to direct investmens in financing the economy on a global scale, their importance for the
development of the global economy and particulary screens the impact of foreign direct investment
in the economic development of Bosnia and Herzegovina. The emphasis is placed on activities
that have to be carried out in order to realize more investments. With the use of statistical and
quantitative analysis, the paper shows that the inflow of foreign capital is fundamental prerequisite
for generating and accelarating of economic development in general. The inflow of foreign capital
has an exstraodinary positive impact on the economic development and increase of business
activities in visably undeveloped and slow economic in Bosnia and Herzegovina.