EFFICIENCY OF GOVERNMENT AND CORRUPTION CONTROL AS DETERMINANTS OF INFLUENCE OF FOREIGN DIRECT INVESTMENTS

Abstract

The paper examines the impact of government efficiency and corruption control as two of a total of six partial indicators of the World Bank's perception of the quality of public governance (World Governance Indicators) on foreign direct investment (FDI) inflows from the Western Balkans (WB) from 2010 to 2019. years. It was concluded that the WB countries slightly improved the efficiency of the government in 2019 compared to 2010. This is a shift that is absolutely insufficient in terms of the imperative to improve the quality of institutions in these countries over a period of ten years. This statement is especially important given the fact that these are countries that are on the way to joining the European union (EU). The situation is even more unfavorable when considering the change of indicators related to the expected control of corruption in these countries. Namely, during the period under review, the perception of the success of corruption control in the WB countries has hardly changed. Moreover, the perceived corruption rate in BiH increased from -0.3 in 2010 to -0.6 in 2019, in Northern Macedonia from - in 2010 to -0.4 in 2019, in Serbia from -0.3 to -0.4. Overall, it can be said that the indicators of the expected efficiency of the government and the expected control of corruption did not have a positive impact on the size of the inflow of foreign direct investments in the WB countries in the observed period of time.