The Development of Foreign Direct Investment in the Czech Republic

Foundation or acquisition of businesses by means of foreign direct investment reflects the intention of a resident of one economy to gain permanent ownership in a subject that is a resident in another economy. The permanent ownership means a long-term relation between the direct investor and investment has a significant influence on managing the company, its investment strategy, production and trade policy, as well as the diversification of risk connected with the currency exchange rate, with the operational and financial result of the company's economy [1]. The development of foreign direct investment gives evidence about the soundness of the host economy and sustainability of its fundaments. It indicates external economic trust in the domestic business environment. It is considered to be a decisive factor of the globalization of the world economy [7]. The reasons for localization vary and often change in the course of time. The most frequent motives why FDI enter the Czech Republic are: relatively cheap and qualified workforce, stable economic and political environment, good geographic position, possibility to penetrate simultaneously into the domestic and European market, investment incentives, etc [9]. The article summarizes selected analyses and trends in development of FDI (20002010) in Czech economy with the objective to assess the effect of FDI on balance of payment and the position of local and foreign businesses in the domestic economy. The issues under the research are part of a wider context - a project titled 'Economic Aspects of Businesses' Integration' that is being prepared. The aim of the project is to characterize and analyze motives and economic consequences of company businesses' integration. We also aim at systematization of respective forms of mergers together with pros and cons related to them. The acquired information will be subjected to the analysis and criticism in relation to the current development.