PROMOTING AND ATTRACTING FOREIGN DIRECT INVESTMENT

Аннотация

FDI is an important element of the economic development of any country and its functioning on market principles. They have a great importance for strengthening the economy of countries in transition and their integration into the world’s economy. The modernization of national economies occurs with FDI help, by implementing advanced technologies, know-how sites, the most powerful equipment, and the new quality standards by switching to a higher type of growth. The purpose of this research is to identify of the policies to attract and promote FDI, adopted by host countries for foreign investors and are highlighted beneficial aspects of foreign investments flows on recipient economies. The research results show that policies aimed at ensuring access to foreign markets, those that are considering providing commercial facilities and last, but not least, policies focused on tax incentives are very important for foreign investors. This study analyzes the relationship between Foreign Direct Investment (FDI) and economic growth in Afghanistan. The objective of this paper is to examine the impact of major economic variables i.e., FDI, inflation rate, exchange rate and interest rate on economic growth of Afghanistan. The time series secondary data is used ranging from 2005-2016. GDP is considered as dependent variable, whereas FDI, inflation rate, exchange rate and interest rate are considered as independent variable. For this study multiple regression analysis has been used and the result shows that all variables show positive impact on economic growth except FDI and inflation rate which show negative impact. The study suggests that there is need of stabilization in inflation rate and considering the Foreign Direct Investment (FDI) the source of economic growth, there is a need of economic policy bound for attracting FDI.