Determinants of Foreign Direct Investment in Georgia

Determinants of Foreign Direct Investment in Georgia PDF

Author: Jacek Cukrowski

Publisher:

Published: 2014

Total Pages: 0

ISBN-13:

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Foreign direct investment (FDI) brings host countries capital, productive facilities, and technology transfers, as well as new jobs and management expertise. Thus it is important to understand why in many countries FDI inflow is lower than it would be expected. The goal of this study is to investigate factors determining flow of FDI in Georgia. The key point of the analysis is the impact of stability of economic and legal environment on the pattern of FDI. In particular, we show that (i) the variability of basic macroeconomic fundamentals decreases the flow of FDI, (ii) high volatility of fiscal, business regulations makes FDI smaller, (iii) unstable economic environment does not attract long term investors but mainly speculative capital. Based on theoretical findings we formulate clear message to policy makers stating that in order to expect significant flow of long term and non-speculative foreign capital, first of all, a stable economic and legal environment is needed.

Can the Georgian Co-Investment Fund increase the Foreign Direct Investment (FDI) by reducing political risk?

Can the Georgian Co-Investment Fund increase the Foreign Direct Investment (FDI) by reducing political risk? PDF

Author: Max Sahle

Publisher: GRIN Verlag

Published: 2014-10-06

Total Pages: 13

ISBN-13: 3656759634

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Essay from the year 2014 in the subject Economics - Case Scenarios, grade: 78%, University College London (School of Slavonic and Eastern European Studies), course: Trade and FDI Policy, language: English, abstract: Georgia has seen a constant inward flow of FDI over the last decade, contributing substantially to economic growth. However, growth has recently slowed while many investment opportunities remain unrealised. To increase FDI and revive economic growth, the former Georgian prime minister and several local and foreign investors have set up a $6 billion fund. The Georgian Co-Investment Fund (GCF) is meant to act as a private investor in FDI projects in Georgia. It can hold 25% to 75% of the equity in a project. Its main investors are former Georgian prime minister Bidzina Ivanishvili as well as some of the biggest foreign investors in Georgia. Over the next five years it plans to invest $3 billion in the energy and infrastructure; $1.5 billion in the manufacturing; and $1 billion in the tourism sector, with smaller amounts for agriculture and other activities. This essay examines how the GCF can help increase FDI by mitigating political risk.

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