Theoretical and Methodological Foundations of Foreign Investments

Abstract

The article discusses the theoretical and methodological aspects of foreign investments and the cycle of work dedicated to investment. 

We consider attracting foreign investment to Georgia as a necessary condition for the optimal formation of the investment market. It ensures the real integration of the Georgian economy into the world economy and is seen as an important and experienced means of overcoming the crisis situation in the economy, its structural transformation, and the transfer of production potential to a modern technological level;

The work „Theoretical and Methodological Foundations of Foreign Investment“ substantiates that foreign investments are today the main instrument for the supply of goods and services on international markets and one of the most important areas of international economic relations. They are increasingly influencing the scale, directions and structure of world economic relations;

       The views of economists on foreign investment, the reasons for the rapid evolution of recognized forms, and the methodological principles of their research in the current context of globalization are analyzed.

      Based on the above-mentioned point of view, an empirical study of the definition and economic content of foreign investment is presented, in particular, its definition is presented according to the concept of foreign investment in international law, the Seoul Convention, as well as the International Monetary Fund and the Law of Georgia on „Promotion and Guarantees of Investment Activities“;

      Against the background of the integration processes of the world investment market and the globalization of the economy, the question of the necessity and possibilities of attracting foreign investments has been raised. At the same time, there is a growing opinion that not only the bold attraction of investments should be the starting point, but also the preservation of the wealth accumulated in the country and the protection of the national interests of the country when investing foreign investments; foreign investments should play the role of a catalyst for economic growth.

     The article analyzes and explains the difficulties and misguided orientations in attracting foreign direct investment to the Georgian economy; it also puts forward recommendations for their elimination, stating that, first of all, it is necessary to develop and implement a correct national economic policy and strategy in this area.

       The work discusses important forms of foreign investment, namely: first of all, this is the creation of new enterprises or the acquisition of existing enterprises; another, second form of capital investment is the acquisition of enterprises by processing local raw materials, so that the foreign market is supplied with products obtained as a result of the processing of this raw material; the third form - in those countries where equipment is generally exported (military and civilian), the creation of logistics and service systems for this equipment, which is a necessary condition for maintaining this sustainable market; the fourth form is the purchase of part or all of these assets in countries importing Georgian energy resources. Such investment of Georgian capital abroad simplifies, weakens dependence on transit countries of energy carriers and increases the reliability of energy supply to foreign partners; the fifth form is the construction of industrial facilities in some countries on commercial grounds; Finally, the sixth form is the participation of capital in the implementation of various programs abroad with foreign partners, which is characteristic of some industries.