Modeling the impact of forein direct investments on gross domestic product of montenegro modeliranje uticaja stranih direktnih investicija na bruto

The process of globalization and liberalization with the expansion of international capital movement influenced the economic system of the Western Balkan countries. Foreign direct investments (FDI) as one of the most important agent of economic growth have had a very significant role in the process of transition from socialist to market economies. FDI was a dominant form of capital inflow in the Western Balkan region. Significant capital inflow into relatively weak economies in the region has had positive effects on overall economic indicators (high growth rates, low level of inflation, increase of employment rates, etc.). In attracting FDI Montenegro has been the leading country measured by net FDI inflow per capita. In Montenegro FDI is considered the most important force of: economic growth, public finance recovery, capital market and banking sector development, i.e. of the overall revival of economy. The goal of this paper is to estimate the impact of foreign direct investments on GDP of Montenegro. The regression model is used to measure the impact of FDI on GDP of Montenegro. The results of the regression analysis serve as an empirical evidence that there is a direct relation between FDI and GDP. This paper contributes to the empirical research of the relations between foreign direct investments and gross domestic product of a host country.