The Importance of Foreign Capital for the Economic Stability of Serbia

Abstract

For Serbia diminishing of current account deficit is a prerequisite for the regular repayment of external debt. It is necessary to attract a bigger amount of foreign direct investment when the process of privatization is finished. Motivation for investing in Serbia has to be intensified by the creation of attractive and stimulating environments. Until now, FDI was mostly directed to purchase of Serbian companies. Economic and institutional factors should be directed to create a framework, which is important for FDI inflow. Every measure contributing to reduce dollarization and strengthen the local currency is a step in the right direction. The success in attracting foreign investments will depend primarily on objective factors, such as the size of national markets, the availability of appropriate inputs, infrastructure and manpower skills. © 2010 Springer-Verlag.