The characteristics 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 can be obs erved that the governments in a number of 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. Irel and is the first country to implement FDI policy successfully. It employs a purely liberal FDI policy, which covers all business sectors; Canada implements a strictly regulated FDI policy while China adopts a 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 economy is highly dependent on foreign capital. Meanwhile, Canada, which attracts tremendous FDI flows, stays least dependent on MNCs. A lowe r 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 the success to attr act FDI is dependent on the government’s ability to employ FDI policy.