• Božidar Raičević, PhD Professor emeritus, Slobomir P University, Doboj
  • Svetlana Ignjatijević, PhD Faculty of Economics and Engineering Management in Novi Sad
  • Ivan Milojević, PhD University of Defense, Military Academy, Belgrade


The object of the research paper is to perform an empirical analysis of foreign direct investment (FDI) influence on economic growth with the aim of establishing factors that will contribute to overcoming the problem. The research results imply that realistic exchange rate, export and import as well as state expenditures are statistically signifcant for predicting economic growth movement and they have a positive influence on FDI movement. Empirical analysis, contrary to expectations, has shown that FDI, public debt and openness have a negative impact on economic growth in the case of Republic of Serbia. In the following period Serbia has to decrease the share of budget defcit in GDP and control public debt. Serbia has to pay special attention to improving investment environment and encourage export oriented production, whereas fnance management and continuation of reform processes are the basis for establishing sustainable development of country, with sustainable use of available resources.


Download data is not yet available.


1. Cuadros, A., Orts, V., Alguacil, M. (2004): Openness and Growth: ReExamining Foreign Direct Investment, Trade and Output Linkages in Latin America. Journal of Development Studies, Vol. 40, No. 4, pp. 167-192.
2. Chowdhury, A., Mavrotas, G. (2006): FDI and Growth: What Causes What?, The World Economy, Vol. 29, No. 1, pp. 9-19.
3. Carkovic, M., Levine, R. (2002): Does foreign direct investment accelerate economic growth?, University of Minnesota Department of Finance. Working Paper, Available at:;
4. Marchant, M. A., Manukyan, T., Koo, W. (2002): International Trade and Foreign Direct Investment: A Focus on the Free Trade Area of the Americas,Available online: (accessed on 25.07.2013)
5. Graham, E. M. (1997): Working Together: Foreign Direct Investment and Trade, Economic Reform Today, Globalization, Trade and Democracy, Number 3.
6. Graham, E., Wada, E. (2002): Foreign direct investment in China: effects on growth and economic performance, Institute for International Economics, Working Paper, (01-03). Available online: (accessed on 11.05.2013)
7. Blomstrom, M., Kokko, A. (2003): The Economics of Foreign Direct Investment Incentives. No. w 9489, National Bureau of Economic Research,
8. Choe, J.I. (2003): Do foreign direct investment and gross domestic investment promote economic growth? Review of Development Economics, Vol. 7, No. 1, pp. 44-57.
9. Brock, G. (2005): Regional Growth in Russia During the 1990s—What Role did FDI Play?, Post-communist economies, Vol. 17, No. 3, pp. 319-329.
10. Nunnenkamp, P., Schweickert, R., Wiebelt, M. (2007): Distributional effects of FDI: how the interaction of FDI and economic policy affects poor households in Bolivia, Development policy review, Vol. 25, No. 4, pp. 429-450.
11. Asiedu, E. (2006): Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability, The World Economy, Vol. 29, No. 1, pp. 63 – 77.
12. Hansen, H., Rand, J. (2006): On the causal links between FDI and growth in developing countries, The World Economy, Vol. 29, No. 1, pp. 21-41.
13. Bengoa, M., Sanchez-Robles, B. (2003): Foreign direct investment, economic freedom and growth: new evidence from Latin America, European journal of political economy, Vol. 19, No. 3, pp. 529 – 545.
14. Hermes, N., Lensink, R. (2003): Foreign direct investment, financial development and economic growth, The Journal of Development Studies, Vol. 40, No. 1, pp. 142-163.
15. Chen, C., Chang, L., Zhang, Y. (1995): The role of foreign direct investment in China’s post-1978 economic development, World development, Vol. 23, No. 4, pp. 691-703.
16. Raičević, V., Ignjatijević, S. (2011): Strane direktne investicije kao podsticaj razvoju privrede Srbije, Međunarodni naučni skup o ekonomskom razvoju I životnom standardu, EDASOL 2011, Banja Luka: Univerzitet APEIRON, 439-448. Available online: (accessed on 15.07.2012)
17. Ignjatijević, S., Milojević, I., Cvijanović, G., Jandrić, M. (2015): Balance of Comparative Advantages in Processed Food Sector of the Danube Countries, Sustainability, Vol. 7, No. 6, pp. 6976 – 6993.
18. Cannonier, C., Francis, B., Lorde, T. (2007): Foreign Direct Investment and Trade in the Eastern Caribbean Currency Union, Journal of Eastern Caribbean Studies, Vol. 32, No. 3, pp. 23 –49.
19. Kolstad, I., Villanger, E. (2004): Determinants of Foreign Direct Investments in Services. CMI Working Paper WP 2004:2, Available online:, (accessed on 11.06.2014)
20. Flexner, N. (2000): Foreign direct investment and economic growth in Bolivia, 1990-1998. Economic Policy Division, Central Bank of Bolivia, La Paz–Bolivia, Available online: (accessed on 15.04.2013)
21. UNCTAD, Available online:, (accessed on 14.06.2014)
22. Campbell, T. (2001): Foreign Direct Investment (FDI) Inflows and their Impact on Barbados’ Current Account: Implications for Substitute/Complements Between FDI and Exports, Research Department, Central Bank of Barbados. Presented at Canadian Economic Association (CEA) 2001 Annual Meeting, McGill University, Montreal, Canada.
23. Lensink, R., Morrissey, O. (2001): Foreign direct investment: flows, volatility and growth in developing countries, University of Groningen.
24. Praća, N. (2015): Recesija i njeno prevazilaženje u uslovima savremenog kapitalizma, Oditor, no. 10, pp. 23-33.
25. Tian, X., Lin, S., Lo, V. I. (2004): Foreign Direct Investment and economic performance in transition economies: Evidence from China, Post-Communist Economies, Vol. 16, No. 4, pp. 497-510.
26. Lensink, R., Morrissey, O. (2006): Foreign Direct Investment: Flows, Volatility, and the Impact on Growth, Review of International Economics, Vol. 14, No. 3, pp. 478-493.
27. The Statistical Offce of the Republic of Serbia, Available online: (accessed on 15.07.2014)
28. Milojevic, I., Zekic, M. (2015): Organizaciona struktura preduzeca kao pretpostavka konsolidacije bilansa, Oditor, Vol. 12, No. 1, pp. 22-28.
How to Cite
RAIČEVIĆ, Božidar; IGNJATIJEVIĆ, Svetlana; MILOJEVIĆ, Ivan. FINANCIAL ANALYSIS OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH OF DEVELOPING COUNTRIES. Economics of Agriculture, [S.l.], v. 63, n. 2, p. 649-663, apr. 2016. ISSN 2334-8453. Available at: <>. Date accessed: 30 oct. 2020. doi: