EFFECTS OF THE INFLOW OF FOREIGN INVESTMENTS IN THE ECONOMY OF THE HOST COUNTRY
The inflow of foreign investments to the host country has different effects on its economy. The aim of this paper is the analysis of direct and indirect economic effects. The most important are: increase in production and employment, the inflow of new technology and knowledge, the impact on external trade and the balance of payments and the growth of competitiveness of the local enterprises. The green field FDIs increase the number of new places of employment. The brown field FDIs cause negative effects — the increase in unemployment.
Foreign investments cause growth through the branches of transnational corporations. But they cause the growth of import too, if the investors do not use the production of the local enterprises.
The activity in the external trade influences the balance of payment’s equilibrium in the host country.
The reaction of the local firms to foreign competition is positive. They try to modernize the process of production to decrease the costs and increase labour productivity.
All this effects appear also in the Polish economy, which attracts more and more inflow of foreign investments.