in the Parliamentary Assembly of the Black Sea Economic Cooperation
The dynamics in the globalization processes and the
intensive international movement of capital have significantly increased the
influence of foreign direct investment in the global economy. They are an
important source of economic growth, bringing additional capital, advanced technologies and modernization, generating local employment, enhancing competition
in the internal economy, stimulating consumption, transferring knowledge,
know-how and good practices. Their importance as a key factor in improving the
competitiveness of the economy is constantly increasing. In this regard, the
development of effective governmental policies to promote foreign direct
investment as a major source of incentives for the
economic growth are a priority for each country. This article is dedicated to
the role of governments in stimulating international investment in some of the countries of the Black Sea region.
Direct
investment flows, which are theoretically linked to the levels of global trade
in goods and services, have suffered a dramatic decline as a result of the
pandemic. According to the Global Economic Outlook (2021-2023), the global
economy in 2020 fell to 3.7% (the highest decline since the Second World War) and
the volume of global trade in goods and services fell to 9.5% in 2021.The
pandemic and its economic consequences have led to a sharp decrease in foreign
direct investment globally and a fierce struggle between the countries
competing to attract limited resources. According to the United Nations
Conference on Trade and Development (UNCTAD), direct investment flows reached
42% in 2020 and a strong jump in 2021, by 77% reaching $1.65 trillion, from
$929 billion in 2020, surpassing their pre-pandemic level.
The successful and proper management of financial assets is at the heart of the eternal drive to increase wealth. The investments represent the mechanism between the capital movements of major economic agents and determine the growth of wealth measured by them. Investments are defined as a universal tool for channeling economic agents' savings towards activities which return is equal to or higher than the market interest rate.[2] The totality of transactions on the sale or acquisition of real or financial assets constitutes investment activity. In this process, participants can be both the state at all governmental levels, as well as the citizens and the business. According to the financial theory and practice, there are two main types of investors – institutional and individual. In general, the behavior of both types of investors is similar, although the institutional investors usually invest bigger amounts. The individual investors are those, who manage their own capital in order to achieve the financial objectives set.[3]According to the definition used by the UN, foreign direct investment (FDI) is investment made to acquire a lasting interest in or effective control over an enterprise operating outside of the economy of the investor. FDI net inflows are the value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net of repatriation of capital and repayment of loans.[4]