The peculiarities of foreign direct investment intensification policy

Abstract

The article analyses the determinants of foreign direct investments, addresses the problem of attracting targeted FDI and highlights the incentives which constitute the FDI policy. However, it is noticed that the governments in number of the countries seek to attract FDI at any price. The article seeks to define the aspects of successfully implemented FDI policy. Ireland, Canada and China have been chosen as the countries of good example of FDI policy. Ireland is the first country successfully implemented FDI policy. It employs purely liberal FDI policy which covers all business sectors, Canada implements strictly regulated FDI policy while China adopts liberal and aggressive FDI policy. The empirical analysis reveals that there is a strong positive relationship between inward FDI and investments in attracting foreign capital. In China’s case a strong positive relationship between FDI and other determinants gives evidence that the growth of an economy is highly dependent on foreign capital. Meanwhile, Canada attracting tremendous FDI flows stays at least dependent on MNCs. Lower than average relationship between FDI flows and the openness of the country shows that Ireland attracts horizontal FDI. The analysis of three cases proves that success to attract FDI is the dependent on the government’s ability to employ FDI policy.