PMA, a new framework for assessing FDI attractiveness.

Abstract

FDI is a very important factor for every national economy. Inward FDI increases job opportunities in the target country, which helps counter-fighting unemployment, a very hot issue in the contemporary world. Furthermore, inward FDI is a positive flow of money helping to improve the country's balance of payments (BoP). The importance of FDI in contemporary international economics, leads to a thorough research for the characteristics, which attract foreign investors, the so-called ‗FDI determinants‘. But the FDI decision is a very complex procedure, based upon data, facts, incidents, characteristics, perceptions etc, making the tracking and identification of the determinants also a very complex issue. Moreover, the FDI-decision is two sided: the side of the investor, searching for the best possible destination for his investment, and the side of the countries‘ policy makers, who try to attract as much foreign capital as possible. Under these considerations, the need for a tool that could assess the countries‘ performance, in terms of FDI attractiveness, is obvious. This tool would help potential investors to find the best possible target country, and countries‘ policy makers to find and improve their country‘s weaknesses. This paper suggests a new framework accompanied by a model for determinants‘ prioritization and assessment. The tool‘s aim is to help potential investors and policy- makers to their FDI related decisions. Its methodology consists of three steps: division of the period of research into sub-periods with similar characteristics; a filtering matrix, which helps prioritize the data and organize them into categories and an assessment tool that gives the desired results. The framework is presented and tested for three Southeast-European countries: Albania, Bulgaria and Romania.