Impact of the Covid-19 Pandemic on Foreign Direct Investment

Marjanović, Darko and Domazet, Ivana and Jovičić, Elena (2022) Impact of the Covid-19 Pandemic on Foreign Direct Investment. In: International Symposium Engineering Management and Competitiveness. Technical Faculty "Mihajlo Pupin", Zrenjanin, pp. 231-236. ISBN 978-86-7672-353-9

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Abstract

Foreign direct investment is an important instrument in the economic growth and development of each national economy. At the same time, they are considered one of the key elements of the globalization process, as they significantly affect the mobility of production factors and world trade flows. Decisions on location choice and form of investment can be made by foreign investors depending on the political and economic situation in the country or the development and stability of specific sectors. The main goal of this paper is to determine whether the crisis caused by the COVID-19 virus has affected FDI mobility. That is, whether in 2020, as the first year of the pandemic, compared to the previous period (2018-2019), there were significant changes in FDI flows. The period covered by the research is from 2018 to 2020. The methodology applied in this research is based on a quantitative approach using available secondary data from the UNCTAD database. The results show that the crisis caused by the COVID-19 virus contributed to a significant reduction in the fluctuation of capital. Specifically, total FDI decreased by about 35% in 2020 compared to 2019, which indicates the negative impact of the COVID-19 crisis on FDI flows.

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