Investment Attractiveness Of The Republic Of Belarus:Current Situation And Factor Analyses

Foreign investment is an important component of the successful economic development of many countries.The need to attract foreign investment is most relevant for developing countries and countries with economies in transition,since the inflow of investments contributes to structural transformations in the economy,stimulates economic growth and effective integration into the world economic system.Currently,domestic sources of investment in the Republic of Belarus that are based on national savings are very limited for building up the sufficient economic potential of the country.Belarus has a number of favorable economic conditions for attracting investors but despite the active measures have been taken to improve the investment climate in recent years,the actual results in attracting FDI still do not correspond to the economic potential and needs of the country.At the present stage,Belarus is inferior to many countries of the region(meaning neighboring European countries and some countries of the former USSR)both in terms of inflow volumes and in terms of FDI accumulation.The inflow of the investment is not stable and its value is having a decreasing trend.The purpose of the study is to show the features of the investment process in the Republic of Belarus and its development trends,to express an opinion on possible ways of its improvement.The study is focused on analyzing factors that may have an influence on the investment attractiveness of the Republic of Belarus and therefore may help in stimulating the investment activity to the country.We used several methods in the research.Qualitative method,which is a data collecting: the method of searching for published and electronic sources,books,websites and magazines.Quantitative method that uses tables and graphs to make the study more accurate in terms of the science and reality.The sources of relevant statistical data are World Bank,United Nations Conference on Trade and Development(UNCTAD),International Monetary Fund(IMF),Belarus National Statistics Agency(BELSTAT).The data was analyzed using descriptive statistics method,correlation and stepwise regression methods.The quantitative data accumulated from the sources were updated with qualitative information obtained in the process of the research.The sources are library books journals,internet,newspapers,articles.The study uses the series of regression analyses to carry out the research.We chose two dependent variables the FDI inflow value and the cumulative FDI stock value.Based on theoretical data about the investment situation in the Republic of Belarus a series of 14 different factors were formed that were divided into 3 groups: economic factors,business stability factors,and research and education factors.The analyses were carried out with each of the three groups separately as well as with all 14 factors using two dependent variables.It is necessary to note that,the volume of investments in the Republic of Belarus is not stable and leaping from year to year.In many cases,the value of incoming investment depends on bilateral projects between Belarus and other countries attracted by the government.Government policy play a very significant role in attracting the investment to the country but these factors are rather hard to assess due to the lack of relevant data.Therefore,it is hard to identify a comprehensive and accurate pattern with indicators influencing and stimulating FDI inflow by the classical scheme.The policies of improvement the investment climate in the country should be aimed at improving economic,business stability as well as research spheres.For the economic group the policy should be aimed at improving general macroeconomic situation in the country that shall include stimulation of GDP growth,maintaining the external debt to normal rates and increasing the volume of the output.It is also necessary to increase the awareness of business and economic life of the country by participating in the larger amount ratings and assesses,so that the investors will have the opportunity to receive more comprehensive picture of the investment climate in the country.Finally,more possibilities for the research and development activities can be created,like technology-innovative special economic zones.The the sphere of new technologies is of high interest worldwide and can be a target for investor's interest.