The Impact of Financial Instability on FDI Dynamics

Georgieva Svrtinov, Vesna and Gorgieva-Trajkovska, Olivera and Kostadinovski, Aleksandar (2013) The Impact of Financial Instability on FDI Dynamics. International Scientific Conference: “Finance and Economic Accounting-the Current Situation, Trends and Prospects. ISSN 978-954-23-0909-3

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The main goal of this paper is to briefly analyze the impact of financial instability on the dynamics of FDI (Foreign Direct Investment) and vice versa. There is a widely accepted opinion among academic economists and economic policy makers that FDI are a lot more stable in periods of financial crisis as opposed to all other capital inflows. Their stability is based on the fact that they can be more difficultly withdrawn from the receiving country, unlike other investments. Yet, the situation differed during the last global financial crisis, which caused a colapse of the global FDI flows. FDIs were significantly reduced and reacted a lot faster to the crisis compared to other forms of capital flows. This indicates that they are not as stable and can demonstrate volatility as all other types of capital flows if the global economy faces substantial financial instabilities. Key words: financial instability, foreign direct investment, financial and economic crises.

Item Type: Article
Subjects: Social Sciences > Economics and business
Divisions: Faculty of Economics
Depositing User: Vesna Georgieva Svrtinov
Date Deposited: 30 Dec 2013 09:38
Last Modified: 07 Aug 2015 09:01

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