Open AccessStructural Analysis of Inward Foreign Direct Investment in Latvia
Author(s) -
Aleksejs Jurša
Publication year - 2021
Publication title -
humanities and social sciences. latvia
Language(s) - English
Resource type - Journals
eISSN - 2592-947X
pISSN - 1022-4483
DOI - 10.22364/hssl.29.1.05
Subject(s) - foreign direct investment , profit (economics) , business , finance , earnings , equity (law) , economics , macroeconomics , political science , law , microeconomics
The aim of this article is to investigate the activity of foreign direct investors in Latvia and find out what is the main source of financing for foreign investors – new investments or reinvested earnings.In order to achieve the set goal and test the hypothesis, the methodology of Sixth Edition of the International Monetary Fund’s Balance of Payments and International Investment Position Manual was used to define the types of foreign direct investment. This methodology was adapted to Latvian data. At the request of the author, Ltd Lursoft IT selected business data on all registered companies with foreign capital in Latvia since 2005 and aggregate data were used in the analysis.Foreign direct investment in Latvia flows mainly in the form of reinvested earnings, due to the profit earned from operating activities in Latvia. While new investments or greenfield investments in equity is lower compared to the amount of reinvested earnings. The results of the study reflect the business results of foreign direct investors in Latvia, as well as their actions in relation to the earned profit from operating activities. These results could be used by the Ministry of Economics of the Republic of Latvia and the Investment and Development Agency of Latvia to improve Latvia’s investment environment and im¬plement a more effective investment attraction strategy.