Examining the Effects of FDI on the Economic Growth of the Republic of Serbia

Abstract

Foreign direct investment (FDI) represents an important source of capital, particularly for transition economies, as it stimulates investment activity, increases productivity, and contributes to economic growth, while strengthening macroeconomic stability and the openness of the economy. In this research, economic development will be monitored through the movement of gross domestic product (GDP), which represents an important indicator of economic activity and overall economic growth. However, the degree of impact of foreign direct investment on gross domestic products and economic growth is conditioned by various economic and institutional factors. The empirical research aims to examine whether and to what extent foreign direct investment inflows contribute to economic growth through increases in gross domestic product in the Republic of Serbia during the period from 2014 to 2024. The study will be based on secondary annual data obtained from the National Bank of Serbia and the Statistical Office of the Republic of Serbia. For the purposes of this research, the multiple linear regression method will be applied, enabling the identification of causal relationships as well as the estimation of economic impact. The results are expected to show a positive and statistically significant impact of foreign direct investment on the economic growth of the Republic of Serbia, confirming their importance as a mechanism for strengthening macroeconomic stability and long-term development. The results indicate a clear upward trend in foreign direct investment inflows, accompanied by overall growth in gross domestic product in Republic of Serbia. The analysis suggests a positive association between FDI inflows and economic growth, highlighting their importance as a factor contributing to macroeconomic development and long-term economic expansion.