THE ASSESSMENT OF THE IMPACT OF FOREIGN DIRECT INVESTMENT ON LITHUANIAN’S COMPETITIVENESS

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THE ASSESSMENT OF THE IMPACT OF FOREIGN DIRECT INVESTMENT ON LITHUANIAN’S COMPETITIVENESS

Journal Title: VADYBA - Year 2016, Vol 28, Issue 1

Abstract

The article through the raised aim overviews the assessment of the impact of foreign direct investment on Lithuania’s competitiveness. In order to identify the factors which attract and repel FDI in Lithuania and to assess the impact of FDI on the competitiveness of Lithuania the expert survey was conducted and 11 different investors from various foreign countries who have established their business in Lithuania have answered the questionnaire. Empirical research has revealed that the positive impact make the following factors in attracting FDI to Lithuania: the most important factor was talented and skilled (mean value 4.36) and work related experience (mean value 4.09) among labour force factors. The highest mean value in cultural factors group scored the following factors: open to foreigners (mean value 4.45), motivated (mean value 4.27) and tolerant (mean value 4). Foreign investors ranked all infrastructure factors more or less the same: flight connections to major world capitals (mean value 3.64) and trade connections (mean value 3.82). Foreign investors ranked possibility of production growth (mean value 4.18) and lower salary in Lithuania (mean value 4) as the most important among economic factors. Foreign investors ranked business environment factors relatively similar however possibility for innovations (mean value 4.27) is prevailing in this sub group and stands out as a factor which makes a positive impact on the country’s competitiveness. The least important factors which repel FDI to Lithuania the experts ranked the following. The least important was education of potential employees among labour force factors where university graduates scored mean value 2.91. Foreign investors were least interested in the religion (mean value 2.55) of potential employees among cultural factors. Infrastructure factors were not the priority for foreign investors in attracting FDI to Lithuania. Moreover, financial incentives from Government (mean value 2.36) were ranked as the least important among Economic factors. Less bureaucracy (mean value 3.18) was ranked as the least important among Business environmentfactors. Based on the results of expert recommendations the suggestions how to attract more FDI to Lithuania are provided at the end of the article: be visible and known worldwide, expansion of investor’s search geography, diversification of sectors for investment, flexible work relationships, education system cooperation with investors, encouragement of Lithuanian communities, decrease of bureaucracy, invitation of current investors to share good experience.

Authors and Affiliations

Daiva Melėnaitė, Rita Remeikienė

Keywords

EP ID EP466509
DOI -
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