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Abstract:
Foreign direct investments are a very important component of a country's economic activity. Many developed and developing countries consider FDI as a vital resource for their economic and social development and prosperity. The relationship between FDI and economic development has been the subject of a large number of researches, starting from simple theoretical analysis to more complicated empirical studies. The main goal of this research is to test the empirical relationship between FDI and economic growth in the Republic of Macedonia, thus testing whether such a relationship is or is not statistically significant. For analysis of the relationship between FDI and economic development we will use annual data for the period 1995 - 2014, which will be tested by the OLS method. The results achieved by the econometric analysis show that there is a positive and statistically significant relationship between foreign direct investment and economic development in the country. So, inflows of FDI and export growth rates contribute to economic growth of the country.
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