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The Characteristics of Foreign Direct Investments in Serbia

Author(s): Pero PETROVIĆ | Slobodan ČEROVIĆ

Journal: Journal of Knowledge Management, Economics and Information Technology
ISSN 2069-5934

Volume: 1;
Issue: 6;
Start page: 312;
Date: 2011;
Original page

Keywords: foreign direct investments | investments in Serbia

The international movement of capital takes place in three main forms,namely: international mobility of credit capital, portfolio investments and foreign direct investments. Foreign direct investments(Greenfield investments) today are considered as the most desirableform of international capital. They represent such type ofcapital investment in the company through which ownership controlover the company is being acquired. Direct investment of capital canbe made in the existing company(modernization, expansion, etc.)abroad,or in the construction of a new capacities("Greenfield investment"). In both cases the capital owner decides where to invest capital, how to organize production, takes care of the conditions of placements,the financial results of operations and the like, but alsobears the risk of doing business. Therefore,foreign direct investmentscarry the highest business risk, but also bring the most revenue orprofit.Foreign direct investments(FDI)play a key role in economicdevelopment. When it comes to the exporting countries, export of capital allows increased use of capacities, expansion of markets andnew technology development, and essentially comes down to profit maximization,especially in medium and long term. When it comes toimporting countries, import of capital provides an additional accumulation, transfer of new technologies and know-­‐how without needto purchase a license, higher exports, the ability to finance new investments which affects the growth of employment,income, laborproductivity, increase of budget revenues and other effects. Thepaper analyzes the main characteristics of FDI in Serbia.
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