FOREIGN DIRECT INVESTMENT AND REGIONAL ECONOMIC DEVELOPMENT: OPPORTUNITIES AND CHALLENGES
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Foreign Direct Investment (FDI) has become a cornerstone of regional economic development strategies worldwide, providing not only capital inflows but also access to advanced technologies, managerial expertise, and innovative practices. By enhancing productivity, stimulating job creation, and strengthening competitiveness, FDI contributes directly to sustainable growth. Empirical studies from countries such as Ukraine, Azerbaijan, Uzbekistan, India, Sri Lanka, and the Balkan states demonstrate the positive role of foreign investment in stabilizing economies and fostering development. Beyond financial benefits, FDI enhances resilience during crises, promotes technological upgrading, and facilitates integration into global value chains. Nevertheless, the effects of FDI are not uniform. Regional disparities, institutional weaknesses, and policy misalignments can limit its benefits or exacerbate inequality. Evidence from China, Brazil, and Bosnia and Herzegovina shows that FDI often concentrates in economically advanced regions, leaving less developed areas with minimal spillovers. Initiatives such as the Belt and Road Initiative highlight the importance of regional integration and infrastructure development in attracting foreign investors. Ultimately, maximizing the developmental impact of FDI requires well-designed policies that strengthen absorptive capacity, ensure equitable distribution, and integrate foreign capital into broader regional development strategies.
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