Investment openness: should all investment be welcomed

Abstract

Purpose – the purpose of this article is to elaborate traits of investment that are conductive or contra-conductive to the development of a national economy that receives an investment. Reasons for investing in a country and reasons why countries attract investment are also provided in the article.

Design/methodology/approach – the analysis of existing literature and analysis of investment attraction, which inter alia includes indications or analysis with regard to desirability of different forms and types of investment, has been employed. Information contained in this paper has been discussed at the international scientific conference called "Changes in Global Economic Landscape – in Search for New Business Philosophy" that was held in Riga on April 29-30, 2011.

Findings – attracting foreign investment is crucial for small, investment-driven countries such as the Republic of Latvia, especially in financially difficult times. Though, not all investments prove to bring benefits to a receiving country. Hence, countries should be aware of the desirable and non-desirable traits of international investment and aim to foster the desirable investment and avoid the pitfalls of non-desirable investment. This paper shows traits of both.

Research limitations/implications – the paper does not look at the reasons at micro (firm) level, but rather at the macro (state/ national) level. This is done with the aim of further elaboration of policies that foster desirable investment, which, however, is out of the scope of this paper.

Practical implications – the paper may serve as a basis for policy makers to see possible implications of international investment on domestic economies.

Originality/value – the author has not come across with considerable analysis on the desirability of investment. Hence, this article is the author‘s first attempt to gather available information and analysis in the domain of desirable and non-desirable investment from the viewpoint of a state.