ANALYSIS OF FOREIGN DIRECT INVESTMENTS IN THE REPUBLIC OF CROATIA

Through the process of globalisation, foreign direct investments are becoming an increasingly important factor in the economic aspect of a country. At a certain time, an investor may invest their capital in an enterprise from another country. There are various factors that affect a potential investor's decision of to enter a new (foreign) market. The goal of this paper is to present the structure of all foreign direct investments in the Republic of Croatia according to activities, the origin of funds, and the type of foreign direct investments, in the period between 1993 and 2016. Furthermore, the attractiveness of the Republic of Croatia for foreign direct investments will be presented. The decision to invest in a certain country can be affected in certain ways (incentives, tax deductions), even though the two key conditions that must be fulfilled in order for a country to become attractive for investments are stability and profitability. During the transition process, the investments in the countries in the region have increased, and this paper will present the position of the Republic of Croatia in relation to those countries. The methods used in the paper are the historical method and the comparative method. The results of the research conducted on the basis of secondary data have shown that the Republic of Croatia is at the very top regarding the inflow of foreign direct investments per capita when considering the surrounding countries, which is definitely a positive indicator. However, the structure of foreign direct investments shows that despite the positive indicators regarding the amount of investments in the Republic of Croatia, the total amount of greenfield investments is not significant. Greenfield investments are the factor that has a positive effect on the exports of the country receiving the investments and they also affect the increase in employment. This fact demonstrates that an appropriate strategy for incentives should be used to change the structure and increase the share of greenfield investments in the total foreign direct investments.