Foreign direct investments and local financial markets

Abstract

International capital movements represent a significant form of international financing and one of the decisive factors of globalization, given that capital invested beyond the national economy borders becomes multinational character, and also it affects the balance of payments, economic growth, employment, transformation of the economic structure, and economic stability of individual countries. International capital movements include international lending, international portfolio investment, and foreign direct investment abroad. At the beginning of the 1990s, the share of capital flows across borders was significantly increased, and their structure was hanged, with significant share of foreign direct investment. This paper presents the effects of foreign direct investment on the host country, and in particular on the economic development of the host country, as well as the perception of the role of local financial markets as intermediaries for achieving potential benefits. The focus of the paper is on the link between finance, foreign direct investment and development. The aim of the research is to point out the complementarity between foreign direct investment and local financial markets.

Keywords

• foreign direct investment
• host country
• economic development
• capital
• financial markets